Blue-Chip Stock Signal Has Never Been Wrong

HD options are affordably priced at the moment, too

Digital Content Manager
Oct 27, 2020 at 12:35 PM
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The shares of Home Depot Inc (NYSE: HD) are up 0.7% at $278.20 at last check. And while the home improvement stock is now cooling off from its Aug. 27, all-time-high of $292.95, the last week's 2.7% pullback has it near a historically bullish trendline, which could push HD even higher in the near future. 

More specifically, Home Depot stock just came within one standard deviation of its 80-day moving average, after spending several weeks above this trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, four similar signals have occurred during the past three years. The security enjoyed positive returns one month after each signal, averaging a 6.4% gain. From the stock's current perch, a move of similar magnitude would put HD right at the $296 mark -- at yet another record high.

HD 80 Day

An unwinding of pessimism in the options pits could also push the security higher. This is per HD's 10-day put/call volume ratio of 1.01 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 88th percentile of its annual range. In simpler terms, this suggests a healthier-than-usual appetite for bearish bets of late. 

Now certainly seems like a good time to take advantage of HD options. The security's Schaeffer's Volatility Index (SVI) of 35%, which sits in the low 20th percentile of all other annual readings, meaning the stock sports attractively priced premiums at the moment. Plus, the equity's Schaeffer's Volatility Scorecard (SVS) ranks relatively high at 75 out of 100, meaning HD has tended to exceed these expectations during the past year -- a boon for premium buyers.  


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