"Buy" Signal Flashing for Exchange Operator

ICE shares are below their year-to-date breakeven point

Managing Editor
Feb 21, 2019 at 2:21 PM
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Exchange operator Intercontinental Exchange Inc (NYSE:ICE) has struggled to take off so far in 2019, yet to break past its year-to-date breakeven level. However, if history is any guide, this could present an intriguing buying opportunity for ICE bulls. 

More specifically, Intercontinental Exchange stock is now trading within one standard deviation of its 320-day moving average. The last four times ICE pulled back to this moving average after a lengthy stretch above it, the equity was up 6.3%, on average, one month out, per data from Schaeffer's Senior Quantitative Analyst Rocky White. Further, returns were positive all four times.

At last check, ICE was up 0.5% to trade at $74.84, on track to snap a four-day skid. A move of similar magnitude would put the equity back near $80, an area not topped on a closing basis since an early-December slide. And just above there sits its Dec. 3 record high of $82.65. 

Daily Stock Chart ICE

There could be pessimism unwound in the options pits. The security's Schaeffer's put/call open interest ratio (SOIR) of 1.65 sits in the 84th percentile of its annual range. This suggests short-term options players have rarely been more put-heavy in the past year. 

Now may be a prime time for those looking to trade ICE's short-term trajectory to do so with options. It's Schaeffer's Volatility Index (SVI) of 16% ranks in the 11th annual percentile, meaning short-term options are relatively cheap at the moment, from a volatility perspective.

 

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