History Says Don't Sweat APO Stock's Pullback

Short-term traders have been biased toward puts

Managing Editor
Feb 14, 2020 at 3:13 PM
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Equity firm Apollo Global Management Inc (NYSE:APO) has struggled to regain momentum after hitting a record high of $52.67 on Jan. 30. Now down 4% year-to-date, APO has pulled back to the 80-day moving average. However, this recent drop may be short-lived, as data from Schaeffer's Senior Quantitative Analyst Rocky White suggests APO may be flashing a buy signal. 

Specifically, Apollo Global Management stock has come within one standard deviation of its 80-day moving average, following an extended period above the trendline. The equity has seen 12 similar pullbacks within the past three years, which has resulted in an average 21-day gain of 8.4%, with 82% of these returns positive. Another move of this magnitude from the stock's current perch of $45.65 would put APO just shy of record-high territory.

Daily APO with 80MA

Digging deeper, Apollo stock sports a Schaeffer's put/call open interest ratio (SOIR) of 2.27. This ratio sits in the 99th annual percentile, meaning short-term traders have rarely been more put-biased during the past 12 months. 

Lastly, options premiums look affordable on APO. The security's Schaeffer's Volatility Index (SVI) of 27% sits in the 28th percentile of its annual range. This means short-term options are pricing in fairly low volatility expectations right now.

 

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