On the surface, such a statement sounds ridiculous. In the past 52 weeks, HPQ stock suffered a loss of around 32%. In the trailing month, it's down 12%. But what people may not immediately realize is that this contradiction between the aforementioned upward bias and the terrible one-year performance is due to HPQ's extreme non-ergodicity.
Without getting too mired in the technicalities, non-ergodicity in this case means that the average performance of HPQ stock distorts its everyday reality. Yes, the sell-offs are quick and severe but generally, HPQ tends to slowly grind upward between the valleys. This slow grind, when viewed in fixed-time intervals, creates an upward bias.
As for PCs being dead, this trope is a category error. Certainly, PCs are mature — we're well past the stage where new features are forcing people to flock to retailers. But the reality is that retail-facing computers represent permanently ingrained infrastructure. Let's be real: you're not going to do your work on a smartphone or tablet.
Even in a future where quantum computers are commercially viable, on the retail end, the access point will be through a classic computer. PCs represent the digital last mile and that's not a situation that's likely to change anytime soon.
In fact, the fundamentals augment the bullish case for HPQ stock. Dead business models simply don't generate free cash flows of $2.8 billion. While no one's saying that HP is the most exciting name in the world, it certainly deserves more credit than it's given.
Exploiting The One Edge That Retail Owns When Trading HPQ Stock
To be quite blunt, anytime you place a trade, Wall Street enjoys the house advantage. However, this advantage must be structured at scale. As a consequence, market makers' risk modeling is essentially monotonic — for every unit of distance away from the current share price, the underlying risk profile rises. Using a sports analogy, it's much easier to make a layup than it is to sink a three-pointer, all other things being equal.
However, the one advantage that retail traders have is that they can elect to price risk non-monotonically. For example, I might want to go for a layup. However, if the lanes to the basket are blocked by a swarm of defenders, the higher-probability attempt may actually be the open guy positioned at the three-point line.
Yes, in a clean environment, a three-pointer is by logic much more difficult to make than a layup. But again, if the route to the layup is blocked, the uncontested three-point attempt may be more prudent — especially if that player is on a hot streak.
Taking it back to HPQ stock, a forecasted price's risk profile is not necessarily dependent on the distance to the current share price but rather on the prevailing winds of the current behavioral structure. Should the projected conditional outcome vary positively from the expected outcome using monotonic risk modeling, traders may be able to extract a structural arbitrage.
I believe that's exactly the case that we have here with HPQ stock. Using aggregated data since January 2019, a random 10-week period would be expected to range between $21.80 and $22.80 (assuming an anchor price or starting point of $22.15). Probability density would likely peak at around $22.30, thus demonstrating the upward bias that I referenced earlier.
However, we're interested in isolating the statistical response to the current quantitative structure. In the last 10 weeks, HPQ stock printed only three up weeks, leading to a downward slope. This sequence — abbreviated as 3-7-D (three up, seven down, downward trend) — would typically be considered a high-risk structure.
Nevertheless, under 3-7-D conditions, probability density peaks at around $24.20 over the next 10 weeks. In other words, while monotonic risk models would point to $22.30 (the layup) as the most likely outcome, the unorthodox, non-monotonic risk model points to $24.20 (the three-pointer) as the more realistic proposition.
Shooting Beyond The Arc
Looking at risk topography — a three-dimensional view of price projection, probability density and population frequency — there's plenty of activity forecasted to materialize between $23.50 and $24.50. Given that HPQ stock may terminate at the end of the next 10 weeks at around $24, this calculation crystallizes an upside opportunity.
Specifically, I'm looking at the 23/24 bull call spread expiring Feb. 20, 2026. For this trade to be fully profitable, HPQ stock will need to rise through the $24 strike price at expiration. Doing so would trigger the maximum payout of over 163%. Breakeven lands at $23.38, adding probabilistic credibility to the wager.
Those who are really feeling optimistic may consider the 23/25 bull spread, also expiring Feb. 20. This trade, if successful, would generate a max payout of over 257%. It's tempting but the probability decay between the $24 and $25 strikes is massive, amounting to a density loss of almost 83%.
As such, I'd be more comfortable with the 23/24 call spread. It offers a strong reward and the underlying structural arbitrage is what I would call a chef's kiss.
Read More:
Image: Shutterstock
© 2026 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
To add Benzinga News as your preferred source on Google, click here.
