7 Stocks Contrarian Bulls Need to Know

Zions Bancorp shares head a list of stocks ripe for a bullish options trade

by Alex Eppstein |

Published on Apr 13, 2017 at 2:33 PM

Schaeffer's Senior Quantitative Analyst Rocky White recently ran a study to look at the best stocks from an Expectational Analysis® point of view. To qualify for the top stocks list, each name had to be positive over the past 52 weeks and have outperformed the broader S&P 500 Index (SPX). In addition, each stock needed to see an increase in short interest, a decrease in the percentage of analyst "buy" ratings, and have a Schaeffer's put/call open interest ratio (SOIR) above 1.00 -- indicating a short-term bias toward put options over calls.

Based on those criteria, below is White's list of the most bullish stocks. Zions Bancorp (NASDAQ:ZION) leads the relatively small group of seven. While the shares are lower profile than many other bank stocks, their prospects are strong, from a contrarian perspective. As of last night's close at $40.19, ZION was up nearly 59% over the last 12 months -- the SPX is up less than 14%, by comparison -- while negative sentiment has piled up. Not even half of analysts rate the outperformer a "buy," short interest has risen 16% in the past year to over 18 million shares, and short-term options traders are put-skewed. In other words, ZION stock has a chance to extend its gains via potential upgrades and short-covering activity, as well as an unwinding among option bears.

top stocks for bullish options traders

Not every stock is in such an ideal position, though. Below is a list of 12 stocks, which White identified as potential bearish plays. Their setup is the opposite of the stocks listed above, in that they've underperformed technically, but have received upbeat attention from traders and analysts alike.

top stocks for bearish options traders

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