Published on Jul 1, 2020 at 12:25 PM
  • Options Recommendations

Real estate investment trust (REIT) Digital Realty Trust Inc (NYSE:DLR) has shown some strength on the charts, despite several obstacles, namely a coronavirus-related bear gap back in March, and an earnings miss that sent the stock lower in May. In fact, the equity boasts a 19% year-to-date lead and shows no signs of slowing down.

WKALT DLR Chart Jun 26

The door is wide open for analyst upgrades and/or price-target hikes too. While nine call the equity a “strong buy,” eight still say “hold.” Meanwhile, the consensus 12-month price target of $147.89 is just a slim 4% premium to current levels.

An unwinding of shorts could put some wind at the equity’s back as well, seeing as the 12.77 million shares currently sold short make up 6.1% of the stock’s available float. Plus, it would take almost a week to buy back these bearish bets, at DLR’s average pace of trading.

For those wanting to speculate on DLR’s next move, options look like a prudent play. The stock’s Schaeffer’s Volatility Index (SVI) stands higher than just 19% of readings from the past year, suggesting options traders are pricing in relatively low volatility expectations for the time being. Lastly, our recommended call option has a leverage ratio of 6.6 and will double in a 15.4% rise in the underlying security.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this DLR commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

Published on Jun 24, 2020 at 12:02 PM
Updated on Jun 24, 2020 at 12:42 PM
  • Options Recommendations

File sharing name Dropbox Inc (NASDAQ:DBX) has shown resiliency on the charts, pushing higher despite broad-market headwinds and a late-March downgrade from Goldman Sachs. A recent pullback was cushioned by support at the $21 level, which happens to coincide with DBX’s initial public offering (IPO) price. The stock has since reclaimed the $22 region -- half Dropbox stock’s 2018 all-time high – and now boasts a 29% year-to-date lead.

DBX Jun 19

Despite this positive price action, shorts have been piling on the security. Short interest nearly doubled in the last month and now represents a healthy 8.1% of DBX’s available float, which could push the stock higher should some of this pent up pessimism start to ebb. Digging deeper, a large amount of call open interest at the 24-strike is about to expire, removing a layer of potential overhead resistance.

What’s more, Dropbox options can be had at a premium right now. The stock’s Schaeffer’s Volatility Index (SVI) of 46% sits higher than just 15% of readings from the past 12 months. This means options players are pricing in relatively low volatility expectations at the moment. Lastly, our recommended call option has a leverage ratio of 4.0, and will double in value on a 25% pop in the underlying security.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this DBX commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

Published on Apr 4, 2017 at 10:13 AM
Updated on Jun 24, 2020 at 10:16 AM
  • Options Recommendations
Signet Jewelers stock has given back more than 44% year-over-year, including a 26.5% loss so far in 2017. The retail shares gapped lower in late February, and have since run into resistance at the pre-gap levels in the $70-$75 neighborhood. Adding to the trouble, heavy call open interest in the April series resides at the 70 and 75 strikes, which could reinforce resistance in this region as front-month expiration approaches. A rejection at these levels could send SIG on its next leg lower. 

sig stock news

Despite the retail stock's recent technical difficulties, short sellers have been in covering mode, with their bearish bets dropping by 40% from their mid-October record highs. Yet, this covering activity has failed to give SIG a boost on the charts. And if shorts begin to pile back on, the stock could see further pressure. A round of downgrades from the brokerage bunch could also create headwinds. At present, six of the 11 firms tracking SIG recommend buying the stock, while not one recommends selling it.

Options traders have been unusually optimistic toward SIG in recent weeks, too. Across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 6.80 not only shows long calls outpacing long puts nearly 7-to-1, but it also ranks higher than 92% of all comparable readings from the past 12 months. An unwinding of this optimism could cause trouble for SIG shares.

Right now is a prime time to purchase premium on SIG. The stock's Schaeffer's Volatility Index (SVI) of 35% -- in the low 14th percentile of its annual range -- indicates near-term options are currently well-priced, from a volatility perspective. What's more, a Schaeffer's Volatility Scorecard (SVS) of 85 suggests SIG has outperformed the volatility expectations that have been priced in over the past year. Lastly, our recommended put option has a leverage ratio of negative 4.5, meaning it will double in value on an 18.5% decline in the underlying shares.

Published on Apr 11, 2017 at 11:04 AM
Updated on Jun 24, 2020 at 10:16 AM
  • Options Recommendations
Shares of online travel company Expedia Inc (NASDAQ:EXPE) have been stair-stepping higher during the past year, and now boast a 52-week advance of roughly 23%. More recently, EXPE pulled back to a trendline connecting higher lows since the beginning of the year. Plus, this pullback occurred at the $132 level, which is four times EXPE's 2007 peak, meaning we're buying the dip from this key area. Expedia is also tentatively scheduled to report earnings after the close on Thursday, April 27, and the shares have rallied in the month ahead of these events in three straight quarters.

170407expe1

The shares' impressive technical performance is forcing short sellers to the exits, too. Specifically, more than 15.4 million shares were sold short back in October, compared to just 9.3 million now. This still represents almost 8% of the stock's float, though, which equates to more than a week's worth of buying power, going by average daily volumes. In other words, there's still sideline cash that could come in and drive EXPE higher.

Options traders have remained extremely bearish, however, illustrated by the shares' 10-day put/call volume ratio of 2.21 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) -- topping 96% of readings from the past year. Also, peak put open interest now sits at the underfoot 125 strike in the April series, and much of this volume is due to sell-to-open activity, suggesting a layer of options-related support is in place.

It's a good time to scoop up EXPE options, too. That is, the stock has a Schaeffer's Volatility Index (SVI) of 16%, which is just 1 percentage point from an annual low.

Subscribers to Schaeffer's Weekend Trader Alert received this commentary on Sunday, April 9.
Published on Apr 18, 2017 at 10:14 AM
Updated on Jun 24, 2020 at 10:16 AM
  • Options Recommendations
Nike stock took a sharp bounce near the round $50 level last November, even as Barron's waxed pessimistic on the stock in early December -- saying "Bottom-fishers beware." While the stock got knocked lower in March by a negative earnings reaction, it found support at $54.50 -- site of its January highs. With this new floor put in place, a level that could be reinforced by the hefty amount of put open interest at the underfoot April and May 55 strikes, NKE stock seems set to add to its impressive 9% year-to-date gain. 

nke stock chart april 13

There's ample cash sitting on the sidelines that could help fuel NKE's fire, too. Short interest has surged 60% year-to-date to 39.7 million shares -- the most since 2010. Should the stock continue to rise, a capitulation from some of the weaker bearish hands could translate into fresh tailwinds.

Plus, there's plenty of room for a round of bullish brokerage notes to draw buyers to NKE's table. Despite the stock's show of strength, half of those covering NKE maintain a "hold" or "sell" suggestion. Upgrades could boost the shares.

It's a prime time to purchase premium on NKE stock, too, considering its Schaeffer's Volatility Index (SVI) of 16% is docked at an annual low. Simply stated, historically low volatility expectations are being priced into NKE's options. 

Subscribers to Schaeffer's Weekend Trader services received this commentary on April 16. 
Published on Apr 25, 2017 at 10:12 AM
Updated on Jun 24, 2020 at 10:16 AM
  • Options Recommendations
Best Buy stock has rallied almost 54% over the past 52 weeks, breaking out to nine-year highs in the process. What's more, these gains have come amid sector-wide headwinds, with the SPDR S&P Retail ETF (XRT) lower on a year-over-year basis. Still, sentiment across Wall Street is overwhelmingly bearish toward BBY shares, creating a perfect contrarian setup for the outperforming stock.

bby chart april 21

First of all, 10 of the 15 analysts covering BBY say it's a "hold" or "strong sell." This suggests the shares are overdue for bullish recognition from the brokerage bunch. Meanwhile, short interest makes up a whopping 13% of the stock's float, which equates to more than eight days' worth of buying power, based on average daily volumes. Shorts could begin to cover, which would help lift BBY.

Options activity has also been extremely bearish. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day put/call volume ratio of 2.11, and that ranks in the 76th annual percentile. An unwinding of these put positions could act as yet another upside catalyst for the retail stock.

Near-term BBY options are also pricing in unusually low volatility expectations at the moment. This is based on the equity's Schaeffer's Volatility Index (SVI) of 27%, ranking in just the 6th annual percentile.

Subscribers to Schaeffer's Weekend Trader services received this commentary on April 23. 
Published on May 2, 2017 at 7:35 AM
Updated on Jun 24, 2020 at 10:16 AM
  • Options Recommendations

IT stock VMware, Inc. (NYSE:VMW) has been rising fast on the charts over the past year, and currently sports a year-over-year advance of more than 65%. The shares are now breaking higher from a recent period of consolidation to trade above their 2015 highs, and with significant call open interest at overhead strikes expiring in the weekly 4/28 series, it appears to be an excellent opportunity to go long on the outperforming security.

170428vmw

Analysts have been slow to take notice of VMW, too. At the moment, 15 of the 28 analysts that cover the stock rate it just a "hold." It wouldn't be surprising to see at least a few of these bears upgrade their ratings, which would provide an extra spark for VMW.

The shares could also stand to benefit from a short-squeeze situation. Short interest accounts for a whopping 37% of the stock's float, which would take more than a month to buy back, based on average daily volumes.

Near-term VMW options are also pricing in unusually low volatility expectations at the moment. This is based on the equity's Schaeffer's Volatility Index (SVI) of 17%, ranking in just the 3rd annual percentile. Plus, our recommended call option on VMware, Inc. (NYSE:VMW) has a leverage ratio of 10, meaning it'll double in value on a 9.3% gain in the underlying shares.

Subscribers to Schaeffer's Weekend Trader services received this commentary on April 30. 
Published on May 9, 2017 at 11:17 AM
Updated on Jun 24, 2020 at 10:16 AM
  • Options Recommendations

Shares of industrial automation firm Rockwell Automation (NYSE:ROK) have put in a strong performance on the charts over the past 12 months -- boasting a 40% year-over-year gain and a 16% year-to-date lead. What's more, the shares hit a record high on April 26, after the company reported a fiscal second-quarter earnings beat and upwardly revised guidance. More recently, ROK has pulled back to reliable support at its 20- and 40-day moving averages, as well as a trendline connecting a series of higher lows since the U.S. presidential election last November.

 

170505rok

 

Even with ROK's technical and fundamental backdrops intact, though, sentiment has room to improve -- which could add fuel to the stock's fire. At the major options exchanges, ROK's top-heavy 10-day put/call volume ratio of 4.89 ranks in the 87th percentile of its annual range, meaning puts have been bought to open over calls at a faster-than-usual clip. Plus, the security's Schaeffer's put/call open interest ratio (SOIR) of 1.33 sits above 78% of all comparable readings taken in the past year. In other words, short-term options traders are more put-skewed than usual toward the stock. An unwinding of this skepticism could translate into a fresh burst of buying power for ROK.

The stock could also get a boost once analysts start to recognize its impressive technical feats. Of the 14 brokerages covering ROK, 11 maintain a "hold" or "strong sell" recommendation. This leaves ample opportunity for upgrades to help lift shares higher.

The stock's options are currently pricing in low volatility expectations, too, a potential boon to premium buyers. Specifically, ROK's Schaeffer's Volatility Index (SVI) of 19% is perched below 89% of all similar readings taken over the last 12 months. Meanwhile, our recommended call option sports a leverage ratio of 8, indicating it will achieve its target profit on an 11.9% rise in Rockwell Automation (NYSE:ROK).

Subscribers to Schaeffer's Weekend Trader services received this commentary on May 7. 
Published on May 16, 2017 at 12:14 PM
Updated on Jun 24, 2020 at 10:16 AM
  • Options Recommendations

Shares of TD Ameritrade Holding Corp. (NASDAQ: AMTD) broke below their year-to-date breakeven mark in early February, and are now staring up at stiff resistance from their 160-day moving average. And while the brokerage firm is one of the weakest technically among its sector peers, high expectations surround the stock -- which, once unwound, could create headwinds for the shares down the road.

170515amtd

 

For starters, speculative traders at the major options exchanges have bought to open 12.56 calls for every put over the last 10 sessions -- a ratio that ranks just 4 percentage points from a 52-week peak. In other words, calls have been bought to open over puts at a near-annual-high clip.

Echoing this, AMTD's Schaeffer's put/call open interest ratio (SOIR) of 0.55 ranks in the low 5th annual percentile, meaning short-term traders have rarely been as call-skewed as they are now. Historically speaking, it's been a good time to go short AMTD when its SOIR was low.

In fact, short sellers have slowly been increasing their bearish exposure to AMTD, but short interest accounts for a low 4.1% of the stock's float. The shares could get pressured even lower, should bears continue to boost their short positions. Plus, there's ample room for analysts to downgrade the stock, which could stoke further selling. Of the 13 analysts providing coverage -- down from 27 in February -- seven maintain a "buy" or better rating, with not a single "sell" to be found.

It's an affordable time to purchase premium on AMTD, too. The stock's Schaeffer's Volatility Index (SVI) of 23% ranks in the 5th annual percentile, suggesting low volatility expectations are being priced into near-term options. Plus, AMTD's Schaeffer's Volatility Scorecard (SVS) of 99 indicates the stock has tended to make outsized moves, relative to what the options market has priced in.

Subscribers to Schaeffer's Weekend Trader services received this commentary on May 14. 
Published on May 23, 2017 at 10:52 AM
Updated on Jun 24, 2020 at 10:16 AM
  • Options Recommendations

Shares of hotel operator Marriott International (NASDAQ: MAR) have put in an impressive performance in 2017, up more than 24%. These strong technicals were in full view earlier this month, when the stock gapped higher post-earnings -- barreling through the century mark, or two times its 2007 peak, and eventually notching a new record high.

170519mar2

 

There's still plenty of skepticism levied toward MAR, which could serve as a boon for the shares as it starts to unwind. Short interest, for instance, has surged 45% since mid-February, even as the stock has added 15%. Not only does MAR's ability to rally in the face of such intense selling pressure speak volumes to its underlying strength, but it would take almost a week to cover these bearish bets, at the stock's average pace of trading. This leaves ample sideline cash available to help fuel MAR's fire.

There's also plenty of room for analysts to upwardly revise their ratings. Of the 17 brokerages covering MAR, 10 still maintain a lackluster "hold" recommendation. A round of upgrades could draw more buyers to the table.

It's also an affordable time to purchase premium on MAR options. While its Schaeffer's Volatility Scorecard (SVS) reading of 81 indicates the stock has tended to make outsized moves relative to what the options market has priced in, its Schaeffer's Volatility Index (SVI) of 19% ranks in the 16th annual percentile -- meaning low volatility expectations are currently being priced in to MAR's options.

Subscribers to Schaeffer's Weekend Trader Series options recommendation service received this MAR commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.
Published on May 31, 2017 at 10:32 AM
Updated on Jun 24, 2020 at 10:16 AM
  • Options Recommendations

Shares of Medtronic PLC (NYSE: MDT) hit a 2017 high after the medical device maker reported better-than-expected earnings and raised its full-year forecast last week. MDT stock is now boasting a more than 19% year-to-date lead. Despite these sound technical and fundamental backdrops, expectations remain low -- which could translate into buying power once the skepticism begins to unwind.

170526mdt

For starters, almost half of the 20 covering analysts maintain a tepid "hold" recommendation. This leaves the door wide open for a round of upgrades, which could help draw more buyers to MDT's table.

Elsewhere, the stock's top-heavy 50-day put/call volume ratio of 1.09 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks 2 percentage points from a 52-week peak -- meaning puts have been bought to open relative to calls at a near-annual-high clip. A capitulation from some of the weaker bearish hands could help boost the stock.

Plus, MDT's Schaeffer's Volatility Index (SVI) of 13% ranks below 92% of all comparable readings taken in the past year, meaning low volatility expectations are being priced into short-term options -- a potential boon to premium buyers.

Subscribers to Schaeffer's Weekend Trader Series options recommendation service received this MDT commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.
Published on Jun 6, 2017 at 11:30 AM
Updated on Jun 24, 2020 at 10:16 AM
  • Options Recommendations

Travel stock Delta Air Lines, Inc. (NYSE:DAL) is in a strong technical position, and looks poised to go higher. The shares are up nearly 21% year-over-year, and just last week made a decisive move above their year-to-date breakeven point and the $50.76 level -- half their all-time peak. After taking a sharp bounce of its 200-day moving average in April, DAL is now staring down its 52-week high, and an unwinding of pessimism could help the stock take out this milestone.

170602dal2

 

One group that could provide an upside catalyst for Delta is short sellers. These bears have continued to target the shares, with short interest more than doubling since its October low -- yet DAL shares have continued to rally. This points to underlying technical strength from the equity, and also suggests the shares could benefit from a short-squeeze scenario.

Not only that, but options traders have been unusually bearish, with DAL’s 10-day put/call volume ratio of 0.95 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) topping 98% of readings from the past year. An exodus of these doubters could also spark additional upside. Plus, oil prices have been falling, with large speculators unwinding their long positions, which should act as a boon to the airline sector.

Finally, it’s a good time to target DAL options. This is based on the stock’s 30-day at-the-money implied volatility of 26%, which ranks in the low 12th annual percentile, and falls in line with historical volatility levels.

Subscribers to Schaeffer's Weekend Trader Series options recommendation service received this DAL commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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