Buy the Dip in This Energy Stock

FTI call options have been hot during the past two weeks of trading

Managing Editor
Aug 10, 2018 at 12:46 PM
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U.K.-based energy concern TechnipFMC (NYSE:FTI) is slightly higher in afternoon trading, last seen up 0.3% at $30.07. The stock has pulled back since its late-July post-earnings surge, moving just below its year-to-date breakeven mark. However, now may be an ideal time to buy the dip on the energy name.

FTI stock is now within one standard deviation of its 200-day moving average, after a lengthy stretch above this trendline. There have been three similar pullbacks for FTI in the past, after which the stock went on to average a one-month gain of 5.8%, per data from Schaeffer's Senior Quantitative Analyst Rocky White. Further, the shares could find support atop a trendline that's connected higher lows since November.

FTI stock chart august 10

In the options arena, the energy stock's Schaeffer's put/call open interest ratio (SOIR) of 0.19 indicates that calls more than quintuple puts among options expiring in the next three months. Further, this SOIR ranks in the 13th percentile of its annual range, meaning short-term speculators have rarely been more call-heavy in the past year.

Digging deeper, it seems traders are expecting a short-term bounce for TechnipFMC stock. The August 32 call saw the largest increase in open interest during the past 10 sessions, with more than 14,000 contracts added during this time frame, and data from the major options exchanges suggests a heavy amount of buy-to-open activity. The August 32 call is now home to nearly 17,000 contracts outstanding -- peak open interest among all strikes.

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