AIG, Fifth Third Stock Charts Suggest Bearish Options Traders at Risk

American International Group Inc (NYSE:AIG) and Fifth Third Bancorp (NASDAQ:FITB) shares have been on fire since the U.S. presidential election

Alex Eppstein
Feb 14, 2017 at 12:29 PM
facebook twitter linkedin


Financial stocks have been surging following hints that President Donald Trump will unveil a "phenomenal" tax plan, and amid hawkish chatter from the Fed. Among the stocks partaking in the renewed "Trump rally" are American International Group Inc (NYSE:AIG) and Fifth Third Bancorp (NASDAQ:FITB). While options traders have been betting against both, shares of the financial companies have recently taken out key technical levels -- suggesting additional upside could be in the cards.

AIG Put Options Pick Up Ahead of Earnings

Ahead of tonight's earnings report, AIG is moving higher, up 0.4% at $66.42. Within the last few sessions, the stock has plowed through a pair of crucial levels. Specifically, the shares took back the 23.6% Fibonacci retracement of their post-election rally, which has largely been supportive. And, more promising yet, AIG hurdled its 50-day moving average, which has been one of the best buy signals over the past year:

aig stock chart fibonacci retracement

Of course, tonight's earnings report could go a long way toward determining where AIG shares travel next. The stock has been hit-or-miss following its last eight post-earnings sessions, up four times and down four times, with an average absolute swing of 3.7%.

As alluded to, options traders have been bracing for an American International Group Inc (NYSE:AIG) pullback, based on data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The stock's 50-day put/call volume ratio of 1.67 ranks near the top quartile of its annual range. More telling yet, AIG's Schaeffer's put/call open interest ratio (SOIR) of 1.22 sits 5 percentage points from a 12-month peak. While some options traders may have picked up puts to speculate on a move lower, others may actually be shareholders hedging against downside risk.

Fifth Third Buy Signal Could Burn Put Players

FITB has a similar technical setup as the one described above. The financial shares recently climbed back above the 23.6% Fibonacci retracement of their post-election low and high, and up 1.8% at $27.22, they're on the verge of taking out the 50-day trendline and triggering the aforementioned buy signal.

fifth third stock chart fibonacci retracements

Meanwhile, Fifth Third Bancorp (NASDAQ:FITB) options traders have been extremely put-focused. The stock's 10-day ISE/CBOE/PHLX put/call volume ratio stands at a lofty 20.44, just 2 percentage points from a 12-month peak. Not to mention, FITB's SOIR registers at an annual high of 3.99, with puts quadrupling calls among options expiring in the next three months. While some put players may be hedging long stock positions, bearish options traders could get burnt if the shares can sustain their upside momentum, as history suggests they will.

Don't miss Schaeffer's free weekly stock market forecast. Sign up now for Monday Morning Outlook.

A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earnings guide for Q3 before it's too late!


  
 
Special Offers from Schaeffer's Trading Partners