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Western Digital stock has tended to outperform in December
November was a historic month for Wall Street, and it ended with an
unprecedented flourish. As we close the book on a roller coaster year, we sought out the best-performing stocks for the month of December. Drilling down on specific names, computer hardware concern
Western Digital Corp (NASDAQ:WDC) stands out as one of the best stocks to own this month. Here's a closer look at how WDC has performed lately, and why it might be a good time to purchase options.
According to Schaeffer's Senior Quantitative Analyst Rocky White, WDC has averaged a December gain of 6.51% over the past 10 years, and has finished the month positive eight times. That's good for best on the list and almost double the average return of the silver medalist, Eli Lilly.
From its current perch at $48.65, a move higher of similar proportions would put WDC above $50 for the first time since an early March bear gap. And although the shares are off by 23% year-to-date, a short-term floor has emerged at the $36 level.
Options traders have been betting on a bigger bounce, too. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), WDC's 10-day call/put volume ratio of 8.70 ranks in the 96th annual percentile. In other words, calls have been bought to open over puts at a quicker-than-usual clip.
Now seems to be a prime time to purchase premium on Western Digital. That's because security's Schaeffer's Volatility Index (SVI) of 43% sits in the 10th percentile of its annual range. This means option traders are pricing in relatively low volatility expectations at the moment.
What's more, these premium buyers are striking while the iron is hot, considering the stock has consistently rewarded options buyers over the past year -- given its elevated SVS of 74.