RIOT could see tailwinds if bearish sentiment begins to unwind
Shares of Riot Platforms Inc (NASDAQ:RIOT) are 5.5% higher to trade at $14.11 this afternoon, extending its choppy pattern on the charts. The Blockchain stock has pulled back more than 40% since tapping an Oct. 10, nearly four-year high of $23.93, but still sports an 11% year-to-date high. A historic bullish signal looks to be flashing, however, meaning more support could be on its way for whipsawing RIOT.
Per Schaeffer's Senior Quantitative Analyst Rocky White, the crypto stock is now within 0.75 of the 260-day moving average's 20-day average true range (ATR), after remaining above it 80% of the time in the last two weeks and in 80% of the last 42 trading sessions. This signal has occurred four other times over the past 10 years, after which the security was higher one month later every single time, with an average 20.1% surge. From its current perch, this lift would put the shares back near $17.
While calls outnumber puts on an absolute basis, RIOT sports a 10-day put/call volume ratio that stands in the 92nd percentile of annual readings at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Should this bearish sentiment unwind, it could put wind at the equity’s back.
A short squeeze could also help, as 49.93 million shares are sold short, accounting for 14.4% of the security's total available float. At RIOT's average pace of daily trading, it would take short sellers almost three days to buy back their bearish bets.
Options are looking affordable as well. This is per Riot Platforms stock’s Schaeffer’s Volatility Index (SVI) of 87%, which ranks in the 30th percentile of its annual range.