The Hottest Dow Stock Right Now

HD is currently boasting the longest daily winning streak of any SPX stock

Aug 8, 2017 at 11:46 AM
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While the Dow is on track to extend its daily win streak to 11, blue chip Home Depot Inc (NYSE:HD) has been on a hot streak of its own. The Dow stock logged an eighth consecutive gain on Monday -- currently the longest winning streak of any S&P 500 Index (SPX) component, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. Plus, HD shares are up another 0.4% to trade at $154.02 today, putting the home improvement name on track for a ninth straight gain, the most for Home Depot stock since November 2015.

Taking a closer look at the charts, HD has been charting a path higher since bottoming at an annual low of $119.20 on Nov. 1. After topping out at a record high of $160.86 on May 16, the equity pulled back to the the $145 region, home to a 23.6% Fibonacci retracement of HD's November-to-May surge. Since bouncing from here, the stock is up more than 6.3%.

hd stock daily chart august 8

Options traders have been quick to bet on more upside for the security, too. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculative traders have bought to open 93,132 calls in the past 10 weeks, compared to 51,730 puts. The resultant 50-day call/put volume ratio of 1.81 ranks in the 80th annual percentile, pointing to increased demand for bullish bets over bearish.

Echoing this extreme call-skew is HD's Schaeffer's put/call open interest ratio (SOIR) of 0.42. Not only does this show that call open interest more than doubles put open interest among options set to expire in three months or less, it ranks lower than 96% of all comparable readings taken in the past year. In other words, short-term speculators are more call-heavy than usual toward Home Depot stock.

With earnings due ahead of the open next Tuesday, Aug. 15, elevated volatility expectations are being priced into near-term HD options -- making it relatively expensive to buy premium. While the stock's Schaeffer's Volatility Index (SVI) of 23% ranks in the 62nd annual percentile, its 30-day at-the-money implied volatility of 17.8% is perched above 65% of all similar readings taken in the last 12 months. 

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