The Best Tech Stock to Own in December

An unwinding of pessimism from options traders could help WDC

Deputy Editor
Dec 1, 2021 at 12:20 PM
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Heading into the end of the year, we sought out the best-performing stocks for the month of December. Though the banking sector overwhelmingly dominates Schaeffer's Senior Quantitative Analyst Rocky White's list of the 25 best stocks to own this month, computer hardware concern Western Digital Corp (NASDAQ:WDC) stands near the top. Here's a closer look at how WDC has performed lately, and why it might be a good idea to consider purchasing options. 

According to White's data, Western Digital stock has averaged a December gain of 8.7% over the past 10 years, and has finished with a positive monthly eight of those times. That's good for third on the list and over four times the average return of KLA (KLAC) -- the only sector peer to show up on the table. 

From its current perch at $59.92, a move higher of similar proportions would put WDC above $65 for the first time since late August. And although the shares have shed around 21% over the last six months, the 40-day moving average is back in place as a trendline of support after months of pressure.

WDC Chart Dec 1

An unwinding of pessimism in the options pits could boost the stock even higher. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), WDC's 10-day put/call volume ratio ranks in the 97th annual percentile. In other words, puts are being picked up at a quicker-than-usual clip.

Short sellers are jumping ship, with short interest falling 13% in a month. The 7.04 million shares sold short account for 2.3% of the stock's available float, or just under two day's worth of pent-up buying power.

 

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