Both Dow names sport attractively priced options, too
Blue-chip United Technologies Corporation (NYSE:UTX) is moving higher, earlier touching a fresh record high of $144.40. And with a historical bull signal now flashing, there's reason to believe UTX has even more room to run.
Specifically, the stock's Schaeffer's Volatility Index (SVI) of 17% ranks in the 9th percentile of its annual range. This indicates short-term options are cheap, from a volatility perspective.
Per data from Schaeffer's Senior Quantitative Analyst Rocky White, the three other times since 2008 that UTX was trading within 2% of a new 52-week high while its SVI was ranked in the bottom 20th percentile of its annual range, the equity posted a one-month gain of 5.86%, and was positive all three times. With the shares on their way to a fifth-straight win and up 0.3% at $142.66, at last check, a similar jump would put the equity above $151 -- in new record-high territory by this time next month.
Longer term, UTX has turned in only three weekly losses in 2019, with its mid-March pullback contained by the 40-day moving average. Since a Dec. 26 bottom just above $100, the equity has added 42%.
What's more, the stock had been an attractive target for premium buyers over the last 12 months, according to its Schaeffer's Volatility Scorecard (SVS) of 89 (out of a possible 100) -- which meant the shares had consistently realized greater volatility than what UTX option premiums had priced in.
Another red-hot blue-chip in focus is Travelers Companies Inc (NYSE:TRV), which nabbed an annual high of its own earlier today, climbing as high as $144.18. And, it just so happens the insurance giant is flashing a similar bullish signal as its blue-chip peer.
Diving in, Travelers stock's SVI of 17% ranks in the 9th percentile of its annual range. According to White, the four other times since 2008 that TRV was trading within 2% of a new 52-week high while its SVI was ranked in the bottom 20th percentile of its annual range, the equity posted a one-month gain of 4%, and was positive 75% of the time.
At last check, TRV was trading at $143.68, so a similar jump would put the equity in new record-high territory near $150 by this time next month, just below its February 2018 all-time high of $150.48. In a similar vein as UTX, Travelers stock has added 29% since its Dec. 26 bottom near $111, is heading toward seventh straight win, and has relied on support from its ascending 20-day moving average.
In the options pits, TRV's Schaeffer’s put/call open interest ratio (SOIR) of 1.45 sits in the 85th percentile of its annual range, showing a rare put-skew among near-term traders. As such, an unwinding of all these bearish positions could fuel upside for the equity.