PBF Energy Stock Could Topple 4-Year Highs

Shares of the energy company are up more than 258% this year

Deputy Editor
Nov 8, 2022 at 1:06 PM
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Energy concern PBF Energy Inc (NYSE:PBF) is worth keeping a close eye on. The stock has chugged higher this year, adding more than 258% in 2022. A steep September pullback was saved by the ascending 180-day moving average, with PBF going on to secure a more than four-year high of $49 on Oct. 27 and securing support from the 10-day trendline along the way. And while it's pulled back slightly since this peak, and last seen down 1.8% at $46.62, there's evidence that PBF Energy stock could soar past its recent highs. 

PBF Chart November 082022

This is because PBF's recent peak comes amid historically low implied volatility (IV), which marks a historically bullish combination for the equity. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, there were five other instances 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 the case with PBF, which sports an SVI of 69% that stands lower than all but 6% of readings from the past year. 

What's more, PBF Energy stock was higher one month after 80% of these signals, and averaged a 7.8% return during this time period. From where it currently sits, a similar move would place the stock at a new four-year high of $50.26. 

An unwinding of pessimism in the options pits could put additional wind at the stock's back. Despite its recent highs, PBF's Schaeffer's put/call open interest ratio (SOIR) of 0.87 sits higher than 74% of readings from the past year. In other words, short-term options traders have rarely been more put-biased. Plus, the 11.2 million shares sold short account for 10.2% of the security's available float.

Now might be the perfect time for options players to speculate on the stock's next move higher. As we mentioned before, PBF's SVI sits in the very low 6th annual percentile. Plus, its Schaeffer's Volatility Scorecard (SVS) sits at 92 out of a possible 100. This means that not only are options traders pricing in relatively low volatility expectations at the moment, PBF Energy stock tends to exceed said expectations -- a good thing for buyers. 



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