WDC Stock Trades Near Key Levels Before Big Month

WDC stock has been great in December

by Josh Selway

Published on Nov 29, 2019 at 11:26 AM

Western Digital Corp (NASDAQ:WDC) just showed up on our list of best stocks to buy for December, averaging a gain of 5.9% during the month over the past 10 years, closing higher 80% of the time, thanks to data from Schaeffer's Senior Quantitative Analyst Rocky White. What's interesting is that these seasonal tailwinds come as WDC stock trades just below the 200-day moving average.

The stock moved back to the closely watched trendline earlier this month, and appears to be on the verge of breaking out above not only that trendline, but the round-number $50 level. At last check, the shares were trading at $50.24, putting their year-to-date gain at around 36%.

wdc stock nov 29x

Options traders are in a strong position to benefit from another December gain for WDC. For instance, the stock's Schaeffer's put/call open interest ratio (SOIR) comes in at 0.61, ranking in just the 10th annual percentile. This tells us that near-term traders are unusually call-heavy. This is mostly due to the setup in the January series, which holds peak open interest overall at the 55 and 65 calls, while the January 2020 60-strike call is also home to notable open interest.

Actually, it still looks like a great time to speculate on Western Digital, since its Schaeffer's Volatility Index (SVI) of 37% ranks in the 11th annual percentile, showing very low volatility expectations at the moment. To take a look at one contract in particular for those expecting another WDC rally, the December 52 call has an ask price of $1.28, meaning a call buyer would begin to profit on a move above breakeven at $53.18 (strike plus premium paid), representing a rise of 5.9% from the shares' current spot.


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