After the bell, IBM reported earnings of $4.87 that beat estimates for $4.82. Revenue of $22.54 billion beat estimates for $21.73 billion. For the full year they reported $13.81 in earnings compared to estimates for $13.79. They guided for fiscal 2019 for earnings of "at least $13.90" while analysts were predicting $13.79. Cognitive solutions revenue was $5.46 billion that beat estimates for $5.27 billion. This includes the Watson unit. Cloud revenue was $8.9 billion and missed estimates for $9.04 billion. The global business segment saw revenue of $4.3 billion that beat estimates for $4.15 billion. Overall revenue declined slightly due to the sale of some software assets to HCL Technologies for $1.8 billion.

IBM is paying $34 billion to acquire Red Hat and the deal is expected to close in the second half of 2019. This will be a transformational event according to Keybanc. It will revolutionize IBM's cloud offerings. Shares rose $8 in afterhours.

We have a February $125 call and the stock closed at $130 in afterhours. We should take out gains at the open on Wednesday and exit the position.

CLOSE:
Long Feb $125 call



Prices Quoted in Newsletter

At Option Investor, we have a long-standing policy prohibiting the editors and staff from actually trading the individual recommendations in order to conform to SEC rules concerning trades.

The prices quoted in the newsletter are the end of day prices in most cases.

When discussing fills or stops the prices quoted are the bid/ask at the time the entry trigger or exit stop is hit. This is NOT a price that someone on staff actually got using a live order.

For entry/exit points at the market open the prices quoted will be the opening print. The majority of the time readers are able to get a better fill than the opening print because of market maker bias at the open.

For trades with an opening qualification the prices quoted will be the bid/ask at the time the qualification was met.

All of these rules normally produce worse prices than an active trader would normally get. Because they are standardized there may be some cases where a price quoted was better than an actual fill. If you received a price that was dramatically different than what was quoted please let us know.