On July 14, 1789, the people of Paris stormed the Bastille, marking the violent end of the absolute authority of power. old regime. Today, on this same date (albeit 237 years later), the stock market has staged its own financial revolution against old regime of technology: International Business Machines.
IBM shares fell from just over $73 to ~$217 – a breathtaking 25% decapitation in a single day. This was the steepest fall of my life in a single session, matching a scale of destruction not seen since January 3, 1968, before I was born.
The catalyst for this sudden coup was a preliminary sales failure in the second quarter. IBM reported revenue of $17.2 billion, below Wall Street’s expectations of $17.9 billion, due to a 7% decline in its infrastructure division. According to CEO Arvind Krishna, enterprise customers have shifted spending away from IBM’s traditional products, stockpiling cash to buy hardware, servers and storage to guard against AI-fueled supply shortages and looming price hikes. While this may be a convenient Krishna narrative rather than an independently verified trend, the market did not wait for a trial. The verdict was absolute and the execution rapid.
But where panic reigns, there is a bounty. In the options stands, the crowd gathered but did not disperse. Typically, when bad news breaks, implied volatility experiences a quick “crush.” Instead, IBM’s one-month implied volatility is trading at its 99.6% level, which dwarfs the premium expansion seen during the 2019 Taper Tantrum, the 2022 rate hike bear market, and the various pricing crises, surpassed only by the 2020 “pandemic plunge.”
Stock chart iconStock chart icon
IBM, year to date
With market prices in absolute chaos, it’s time to take a “headshot” stance on high premiums. Given that the stock has already undergone a massive 25% structural revaluation, most of the downside momentum is likely exhausted. By selling the August 21, 2026, 190/245 monthly short strangle, we can collect a massive premium from terrified buyers, betting that the stock will quietly consolidate within its new post-revolution limits.
Premium captured: ~$11.25 per strangle (as of July 14, 2026, close). This represents a flat return of 5.18% relative to the underlying stock price in just 38 days.
Break-even point on the downside: $178.75 (around 17.6% below current price)Break-even upside: $256.25 (around 18.1% above current price)This trade is based on a wide and symmetrical margin of safety. To break the lower barrier of $178.75 – a level not reached since early 2024 – IBM would need to fall an additional 18% from its already broken state. If you are forced to accept an assignment, you establish a long position at a steep historical discount. By contrast, to recoup $256.25, IBM would need to recoup more than half of today’s historic sale before the August expiration, an unlikely feat given the sudden freeze in the company’s software and consulting budgets.
As the dust settles after the July 14 eruption, the market has left the doors wide open for options sellers. The news broke, but the panic kept options premiums high. For those wishing to capture fear, the short strangle offers a very likely path to seeing the remaining bounty slowly fade away.
