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Trading HP In Wake Of Hurd Scandal

Monday, 9 Aug 2010 | 5:31 PM ET

Shares of HP plunged on Monday after CEO Mark Hurd quit in the wake of an investigation, which found he had falsified expense reports to conceal a "close personal relationship" with a female contractor.

How should you game it?

I go back to the May 6th low of $41.95, says Guy Adami. I think that's an important point of reference and looking at the move on August 9th, a likely level of support.

HP is probably cheap here, says Jared Levy of the Halftime Report. I’d think about selling the September 41 put which obligates you to get long the stock.

Just because Mark Hurd is leaving doesn’t mean HP won’t keep performing, says Pete Najarian. I’d bet on more upside. But perhaps the best way to play it is with calls, just in case.

I’m thinking about adding to my position, says Patty Edwards. I was thinking about pulling the trigger this morning – but I want to know more before I do that.

I think the stock is too risky to be long, says Eric Jackson of Ironfire Capital. Can you really trust the board; what if they pick another Carly Fiorina? The new CEO is going to be critical. Personally, I think the strongest internal candidate is Todd Bradley and I suspect he’s the front runner.

I think the trade is long IBM, adds Steve Cortes.

What's Next for HP?
Discussing who the best candidates are to replace Mark Hurd, with Michael Holt, Morningstar analyst.

* Want more HP? Hear from Morning Star analyst Mike Hold. Watch the video now!


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Trader disclosure: On Aug 9, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Finerman owns (AAPL); Finerman's firm owns (ARM); Finerman & Finerman's firm owns (BAC); Finerman’s firm owns (BBY); Finerman's firm owns (LEA); Finerman’s firm owns (KFT); Finerman & Finerman's firm owns (JPM); Finerman & Finerman's firm owns (RIMM); Finerman’s firm owns (TSX); Finerman’s firm owns (GYMB); Finerman’s firm owns (PLCE); Finerman's firm owns (WMT); Finerman's firm owns (DAN); Finerman's firm is short (IJR); Finerman's firm is short (MDY); Finerman's firm is short (SPY); Finerman's firm is short (IWM); Finerman’s firm owns S&P 500 puts; Finerman’s firm owns Russell 2000 puts; Pete Najarian owns (HPQ) call spread; Pete Najarian owns (RIMM) call spread; Pete Najarian owns (GS) calls; Pete Najarian owns (V) call spread; Cortes owns (CIB); Cortes owns (FCX); Cortes owns (OAS); Cortes owns (QQQQ); Cortes is short US Treasuries; Cortes is short the Japanese Yen; Stutland is long (TLT) and short calls; Stutland owns US treasuries

For Brian Kelly
Accounts managed by Kanundrum Capital own (INTC)
Accounts managed by Kanundrum Capital own (RIMM)
Accounts managed by Kanundrum Capital own (ECA)
Accounts managed by Kanundrum Capital own (JPM)
Accounts managed by Kanundrum Capital own (C)
Accounts managed by Kanundrum Capital own (TLT)

For Patty Edwards
Edwards owns (SPY) for clients
Edwards owns (QQQQ) for clients
Edwards owns (HPQ) for clients
Edwards owns (QCOM) for clients
Edwards owns (AAPL) for clients
Edwards owns (VZ) for clients
Edwards owns (C) for clients
Edwards owns (BAC) for clients
Edwards owns (MCD) for clients

For Joe LaVorgna
***No Disclosures***

For Will Power
Robert W. Baird & Co. and/or its affiliates expect to receive or intend to seek investment banking related compensation from (RIMM), (MOT), (NOK), (GOOG), (AAPL) within the next 3 months.

For David Bank
RBC Capital Markets is currently providing The Walt Disney Company with non-securities services

RBC Capital Markets has provided The Walt Disney Company with non-securities services in the past 12 months

For Kurt Nelson
SummerHaven Index Management is the creator and licensor of the SDCI to the U.S. Commodity Index Fund, and SummerHaven Investment Management is the trading advisor to USCI

For Eric Jackson
Ironfire Capital is long (MSFT)

For Nishu Sood
(DHI), (RYL) are investment banking clients of Deutsche Bank

(DHI) has been a client of Deutsche Bank Securities Inc. within the past year, during which time it received non-investment banking securities-related services

Deutsche Bank has received non-investment banking related compensation from (MTH), (RYL) within the past year.

CNBC.com with wires.

  Price   Change %Change
HPQ
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IBM
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