New York Times Stock Could Make Huge Moves This Summer

Short-term NYT options are attractively priced

Managing Editor
Jun 19, 2018 at 12:09 PM
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Since 2016, the New York Times Co (NYSE:NYT) has been under constant fire from President Donald Trump for its proliferation, in his words, of "fake news." Despite his assertion that the publication has been "failing," the stock has outperformed in recent years. And although NYT is down 0.9% to trade at $24.80 at last check, the publishing name just offered up a pretty notable "buy" signal heading into the dog days of summer. 

Looking closer, NYT stock hit a nearly 11-year peak of $25.70 on Feb. 26 on the way to its best quarter since 2011. On Friday, as the security locked up its best week since mid-January, it came within a chip shot of the multi-year high once again, closing at $25.35. Overall, the shares have added 34% in 2018, with recent pullbacks earlier this month contained by their 120-day moving average.

What's more, the stock's Schaeffer's Volatility Index (SVI) is docked at 25% -- in the sixth percentile of its annual range, meaning short-term options are extremely cheap at the moment from a volatility perspective. According to Schaeffer's Senior Quantitative Analyst Rocky White, the one other time NYT had been trading near 52-week highs with its SVI ranked in the 20th annual percentile or lower, the stock was up more than 19% one month later. Another rally of this magnitude would put the security near $30 one month from now for the first time since 2005.

NYT Stock Chart

Should New York Times stock keep climbing, a short squeeze could provide more tailwinds. Short interest held steady in the most recent reporting period, yet the 15.92 million shares sold short represents nearly 13% of the security's total available float. At the equity's average trading volume, it would take more than seven days for shorts to cover their positions.

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