Analyst: Don't Sweat This Insurance Stock's Pullback

An unwinding of pessimism could boost AIG

Digital Content Manager
Mar 7, 2022 at 2:49 PM
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American International Group Inc (NYSE:AIG) is down 3.5% to trade at $55.49 this afternoon. Today's drop came despite Credit Suisse noting the credit and investment risk the insurance concern faces associated with investments in Russian and Ukrainian fixed income securities seemed "immaterial." The equity has cooled off from a Feb. 9, four-year high of $63.54 in recent weeks, but there is reason to believe this pullback may be just temporary, given AIG is now trading near a historically bullish trendline.

Digging deeper, American International Group stock just pulled back to its 200-day moving average for the first time since December. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, comparable moves have occurred four times over the past three years, with the security enjoying a positive one-month return 75% of the time, while averaging a 5.6% pop. A similar move from its current perch would put AIG back above the $58 level.

AIG 200-Day

An unwinding of pessimism in the options pits could create additional tailwinds for the equity. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), AIG's 10-day put/call volume ratio of 1.13 sits higher than 87% of readings from the past year. This indicates puts have been getting picked up at much faster-than-usual clip.

 

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