In last week's edition of Trading Tools, we examined commodities concern McMoRan Exploration Co. (MMR), as it appeared on the Zacks Unusually High Option Volume filter. However, utilizing the Zacks Put/Call Ratio Greater than 1.0 screener today, I stumbled upon another equity that piqued my curiosity: shipping issue Excel Maritime Carriers Ltd. (EXM: sentiment, chart, options).
For an explanation on the contrarian stance that makes Schaeffer's so unique, check out a recent version of Trading Tools.
The Put/Call Ratio Greater than 1.0 screener
Before we begin, let's break down today's stock screener. The filter looks for stocks with a high put/call open interest ratio, indicating a preference for bearish bets among near-term options. Why is this important? Simply put, a high Schaeffer's put/call open interest ratio (SOIR) – measuring options with less than 3 months until expiration – suggests that expectations for the security to rally are extremely low. In other words, a high SOIR usually indicates skepticism among short-term options speculators.
Skepticism sails higher
According to Zacks, EXM harbors a SOIR of 1.16, as puts outnumber calls among near-term options. Compared to similar readings taken during the past year, the stock's SOIR ranks in the 91st annual percentile, suggesting that near-term options traders have been more bearishly biased toward the dry bulk diva only 9% of the time during the past year.
The low expectations in the options pits are even more apparent when looking at EXM's front-month open interest configuration. While peak call open interest in the May series rests at the near-the-money 7.50 strike, peak put open interest is docked at the out-of-the-money 2.50 strike, home to nearly 3,000 contracts.
Furthermore, the pessimism among options players is on the rise, as indicated by recent data from the International Securities Exchange (ISE). During the past couple of weeks, speculators on the ISE have bought to open nearly twice as many puts than calls on the equity. This lofty 10-day put/call volume ratio of 1.83 ranks in the 88th annual percentile, implying that investors on the exchange have been scooping up EXM puts at a much faster pace than usual lately.
Now that we know the options arena is bearishly biased toward the shipping sultan, one question remains: is it warranted?
Braving the technical storm
Since grazing the 3 level in early March, the shares of EXM have more than doubled. Powering through former resistance at its 10-week and 20-week moving averages, the stock has outperformed the S&P 500 Index (SPX) by an impressive 63% during the past 60 trading sessions. However, the security's run higher could face a potential speed bump in the 8-to-10 neighborhood, which once acted as support, and has contained EXM's rally attempts since November 2008.
Word on the Street
However, despite potential technical hurdles, the analyst community has high hopes for EXM. Thomson Reuters pegs the consensus 12-month price target on the equity at a lofty $11.96, in territory not explored since October 2008. In order to achieve this ambitious goal, the shares would need to muscle roughly 71% higher from their current trading range.
Should resistance in the 8-to-10 region smack the stock lower, the bulls among the brokerage bunch could abandon ship. As analysts capitulate to the bears' lair, a fresh wave of price-target reductions could place additional selling pressure on the shares.
It's here! Click here to check out "Bernie Schaeffer's SENTIMENT, smart options for today's investor," a new quarterly magazine devoted to the subject of options trading. SENTIMENT'S inaugural edition includes a cover story by Bernie -- "Are We There Yet?" -- that arms readers with some new tools for gauging a market bottom. Every issue of SENTIMENT will include advanced strategy stories to help experienced traders build their portfolios, along with educational pieces for the relative newcomer.
Discuss this article:
Post your own comment
More articles:
In last week's edition of Trading Tools, we took a gander at OmniVision Technologies, Inc. (OVTI), which was the center of some animated put-selling activity highlighted by the Schaeffer's Most Active Options filter. Employing the same stock screener for today's column, a different equity piqued my curiosity: Canada-based commodities concern Yamana Gold Inc. (AUY: sentiment, chart, options). read more...
In last week's edition of Trading Tools, we took a gander at Las Vegas Sands Corp. (LVS), which was the center of some animated put activity highlighted by the Schaeffer's Most Active Options filter. Employing the same stock screener for today's column, a different equity caught my eye: semiconductor issue OmniVision Technologies, Inc. (OVTI: sentiment, chart, options). read more...
In last week's edition of Trading Tools, we took a gander at Solarfun Power Holdings (SOLF), which saw unusual call activity highlighted by the Schaeffer's Most Active Options filter. Employing the same stock screener for today's column, a different equity caught my eye: casino concern Las Vegas Sands Corp. (LVS: sentiment, chart, options). read more...
In last week's edition of Trading Tools, we took a gander at EMC Corporation (EMC), which was the center of a short straddle highlighted by the Schaeffer's Most Active Options filter. Employing the same stock screener for today's column, a different equity caught my eye: Chinese photovoltaic cell and module maker Solarfun Power Holdings Co., Ltd. (SOLF: sentiment, chart, options). read more...
In last week's edition of Trading Tools, we took a gander at China BAK Battery Inc. (CBAK), thanks to a pop in put volume highlighted by the Schaeffer's Most Active Options filter. Employing the same stock screener for today's column, a different equity caught my eye: information technology issue EMC Corporation (EMC: sentiment, chart, options). read more...
In last week's edition of Trading Tools, we took a gander at First Solar, Inc. (FSLR), thanks to a surge in call volume highlighted by the Schaeffer's Most Active Options filter. Employing the same stock screener for today's column, a different equity caught my eye: China BAK Battery Inc. (CBAK: sentiment, chart, options). read more...
In last week's edition of Trading Tools, we analyzed solar module maker First Solar, Inc. (FSLR), thanks to a surge in out-of-the-money call activity highlighted by the Schaeffer's Most Active Options filter. Utilizing the same stock screener for today's column, a different security caught my eye: Missouri-based coal company Peabody Energy Corporation (BTU: sentiment, chart, options). read more...
In last week's edition of Trading Tools, we analyzed blue-chip behemoth IBM (IBM), thanks to a long straddle highlighted by the Schaeffer's Most Active Options filter. Employing the same stock screener for today's column, a different security caught my eye: Arizona-based solar module mogul First Solar, Inc. (FSLR: sentiment, chart, options). read more...
In last week's edition of Trading Tools, we analyzed semiconductor sultan SunPower Corporation (SPWRA), thanks to an influx in call volume highlighted by the Schaeffer's Most Active Options filter. Employing the same stock screener for today's column, a different security caught my eye: blue-chip bigwig International Business Machines Corp. (IBM: sentiment, chart, options). read more...
In last week's edition of Trading Tools, we analyzed semiconductor sultan OmniVision Technologies, Inc. (OVTI), thanks to an influx in pre-earnings option volume highlighted by the Schaeffer's Most Active Options filter. Employing the same stock screener for today's column, a different security caught my eye: solar power concern SunPower Corporation (SPWRA: sentiment, chart, options), which was flooded by call traders on Thursday. read more...
Today's Most Popular Stories
working... 
