RTX Could Soon Make Another Attempt at Fresh Highs

A shift in the options pits could push shares higher

Digital Content Manager
Jul 29, 2021 at 3:04 PM
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The shares of Raytheon Technologies Corp (NYSE:RTX) are up 1.4% at $88.44 this afternoon. The aerospace company seems to be still enjoying tailwinds from earlier this week, when it reported a quarterly earnings beat and raised its full-year profit forecast, amid higher demand for its commercial engines, spare parts and aftermarket services. What's more, the shares have added 48% year-over-year, bouncing off the 120-day moving average to come just shy of their June 10 annual high of $89.98. The equity could soon make another attempt to overtake that peak, too, as RTX is now flashing a historically bullish signal.

Specifically, Raytheon Technologies stock's latest peak comes amid historically low implied volatility (IV), which has been a bullish combination for the security in the past. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, there have been three other times over the past five years when the stock was trading within 2% of its 52-week high, while its Schaeffer's Volatility Index (SVI) was in the 20th percentile of its annual range or lower. This is now the case with RTX's SVI of 27%, which stands in the 8th percentile of its 12-month range.

White's data shows that one month after these signals, the equity was higher 67% of the time, averaging a 0.7% return. From its current perch, a similar move would place RTX back above the $89 mark.

 RTX 120 Day 

Additional tailwinds could come from a shift in the options pits, which lean bearish. This is per RTX's 50-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 74% of readings in its annual range. In other words, long puts have been getting picked up at a quicker-than-usual rate over the past 10 weeks.

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