Peabody Energy Stock Looks Poised to Extend Rally

The equity boasts a jaw-dropping 727.7% year-over-year lead

Digital Content Manager
Apr 18, 2022 at 3:26 PM
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Peabody Energy Corporation (NYSE:BTU) is down 1.3% at $32.12 at last check. The last time we checked in with the Peabody Energy stock, call traders had used the mining name to triple their money. BTU still has support from the 20-day moving average, and earlier today hit its highest level since February of 2019, while boasting a jaw-dropping 727.7% year-over-year lead. What's more, there is plenty of reason to believe the stock's rally is not slowing down anytime soon.

BTU 20 Day

Digging deeper, this recent peak comes amid historically low implied volatility (IV), which has been a bullish combination for Peabody Energy stock before. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, there have been five other times in the past five years when the security was trading within 2% of its 52-week high, while its Schaeffer's Volatility Index (SVI) stood in the 20th percentile of its annual range or lower. This is currently the case with BTU's SVI of 89%, which stands in the relatively low 10th percentile of its 12-month range.

White's data shows that one month after these signals, the security was higher 80% of the time, averaging an impressive 14.7% return for that period. From its current perch, a move of similar magnitude would place Peabody Energy stock just shy of the $37 mark.

A short squeeze could also keep the winds blowing for BTU. Short interest rose 22.7% in the last two reporting periods, and the 12.19 million shares sold short now make up for 8.9% of the security's available float. 

It's also worth noting the equity's Schaeffer's Volatility Scorecard (SVS) sits at 99 out of a possible 100. This means Peabody Energy stock has managed to exceed volatility expectations during the past year -- a boon for option buyers. 

 

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