History Says Gamble on an April Win for This ETF

BJK has averaged an April gain of more than 5% in the past decade

by Andrea Kramer

Published on Mar 27, 2019 at 1:11 PM

We recently outlined the best and worst stocks to own in the month of April, historically. Today, we're taking a broader look to see which sectors tend to shine next month. Among the best exchange-traded funds (ETF) to own in April over the past 10 years has been the VanEck Vectors Gaming ETF (BJK), which boasts casino stocks like Las Vegas Sands (LVS) and Wynn Resorts (WYNN) among its top holdings.

Of all the ETFs we track, BJK has generated the biggest average April return of 5.3%, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. Further, it's one of the few funds that have ended April in the black at least 80% of the time over the past decade.

ETF performance in April

The shares of BJK have added nearly 10% so far in 2019, but recently ran into a wall in the $38 region. This level has acted as a roadblock for the ETF since October, and also represents a 38.2% Fibonacci retracement of the fund's fall from its May highs to its Dec. 26 lows. Further, the formerly supportive 160-day moving average has descended into the area, and contained BJK's rally attempt in late February. At last check, the ETF was trading around $36.25. Another 5.3% bump from current levels would place the shares around $38.17, right around its February highs.

BJK ETF chart March 27

Although absolute options volume tends to run light on the gaming ETF, traders have been betting bullishly. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), BJK's 10-day call/put volume ratio stands at 5.50, indicating buyers have picked up more than five calls for every put on the fund in the past two weeks.

Short-term options on the ETF are attractively priced, too. Its Schaeffer's Volatility Index (SVI) of 16% is higher than just 28% of all other readings from the past year, suggesting near-term BJK options are underpricing volatility at the moment.

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