Why Under Armour Stock Is a Safe Bet for June

The security sports attractively priced options

Jun 3, 2021 at 1:11 PM
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As previously established, the S&P 500 (SPX) is heading into a historically bearish month. With that in mind, we compiled a list of the 25 best-performing stocks to own in June. Below, we will explore Under Armour Inc (NYSE:UAA), which appeared on the list and is down 1.9% at $22.27. It is still worth diving deeper into the security's technical setup, though, as now could be the perfect time to speculate on UAA's next move with options. 

According to Schaeffer's Senior Quantitative Analyst Rocky White, Under Armour stock has averaged a gain of 8.23% in the month of June for the last 10 years. Plus, UAA has finished the month in the black 80% of the time. The security also stands among the top 10 percentage gainers on the list, and is the only personal goods name to make the cut.

A move of similar magnitude would put UAA just above the $24 mark, which is in line with a bull signal that sees the equity moving higher after pulling back to the historically bullish 80-day moving average. Now up nearly 30% in 2021, Under Armour stock has found floors at both the $22 level, as well as the supportive 100-day moving average. 

UAA Chart 2 June 3

A short squeeze could push the security higher still. The 16.83 million shares sold short make up a 9% of the stock's available float, orover three days' worth of pent-up buying power.

Sentiment surrounding the equity has been overwhelmingly bullish of late. In fact, at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), UAA's 10-day call/put volume ratio of 23.23 stands higher than all other readings from the past year. In simpler terms, options traders have rarely had as healthy of an appetite for calls. 

Lastly, now looks like an ideal opportunity to buy Under Armour stock options. That's because equity's Schaeffer's Volatility Index (SVI) of 38% stands in the extremely low second percentile of its annual range. This means option traders are pricing in low volatility expectations at the moment -- a boon for premium buyers.

 

Make the Most of the next Expiration Week Countdown!


 




 
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