The Best Blue-Chip Stock for Options Bulls This Month

Home Depot stock tends to do well in April

Digital Content Manager
Apr 4, 2022 at 12:23 PM
facebook twitter linkedin


It's been a rough couple of months for blue-chip home improvement retailer Home Depot Inc (NYSE:HD). Shortly after the company suffered a post-earnings selloff in February -- made even worse by a beat-and-raise from top competitor Lowe's -- the security hit an eight-month low just above the $299 level. While Home Depot stock managed to distance itself from this rout, the 40-day moving quickly sent the stock to even more lows late last week. However, hope might not be completely lost, as the equity has seasonality on its side, which could help guide HD to a win in April.

hd chart april 4

To be more specific, Home Depot stock just landed on Schaeffer's Senior Quantitative Analyst Rocky White's list of S&P 500 stocks with the best returns in April, going back 10 years. According to this data, Home Deport stock enjoyed positive one-month returns 90% of the time, averaging a 4.3% jump in this time period. From HD's current perch of $303.17, a similar move would put the shares back atop the $316 level. And while these gains look relatively muted compared to some others on the list, the equity is the only blue-chip stock and member of the retail sector that made the cut. 

best of april

An unwinding of pessimism in the options pits could put additional wind at the equity's back. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), HD sports a 50-day put/call ratio of 1.25, which sits higher than 91% of all annual readings. In other words, long puts are being picked up at quicker-than-usual clip. 

It might be the ideal time to speculate on HD's next move with options, too. The stock's Schaeffer's Volatility Index (SVI) of 48% sits in the lowest quartile of its 12-month range. In other words, options traders are pricing in relatively low volatility expectations right now. What's more, the stock boasts a Schaeffer's Volatility Scorecard (SVI) of 91 (out of a possible 100), implying HD tends to outperform said volatility expectations. 

 

Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

 
Schaeffer's Daily Bulletin Offer
 


 


 
Special Offers from Schaeffer's Trading Partners