"...equities have performed better in the short term when the Fed holds rates steady versus hiking rates during this tightening cycle. Therefore, with support continuing to hold on pullbacks and negative sentiment representing future buying power, the current environment favors the bulls."
-- Monday Morning Outlook, May 7, 2018

S&P 400 Mid Cap Index - This week broke out above 1) trendline connecting lower highs since January, 2) 1,900 century mark and 3) 2017 close at 1900.57 $MID $.IDX

— Todd Salamone (@toddsalamone) May 9, 2018

Major U.S. equity benchmarks rallied last week, supporting a theme that I have pointed out for months regarding bullish tendencies following Federal Open Market Committee (FOMC) decisions to hold rates steady, which occurred on May 2. Not so welcoming to market participants have been FOMC decisions to raise rates, which last occurred on March 21. The SPDR S&P 500 ETF Trust (SPY - 272.85) followed script, with lackluster price action following that March rate hike -- until the early May meeting acted as a "green light" for bulls.

The only exception to this theme was in December-February, when investors put more weight on tax cuts than the Fed’s decision to raise rates in December. But payback soon followed, as the January high was nearly coincident with the Fed holding rates steady. Therefore, Fed actions seem to be more important than speculation about what it does next, or unrelated headlines that either shake investors' nerves or stoke enthusiasm in between meetings.

The rally last week drove equity benchmarks through resistance levels, some of which are obvious, such as the SPY trendline connecting a series of lower highs since late January, which formed the basis for the "triangle" formation you have likely heard or read about. Not so obvious was the SPY’s close above $270.43, which hadn't occurred since the March 21 decision to raise interest rates, despite an April 18 intraday challenge. That marked the beginning of a steady slide into the May meeting.

On the heels of the Fed holding rates steady earlier this month, the latest move above SPY $270.43 is likely to have staying power. Admittedly, I do have some unease with the amount of press surrounding the triangle breakout. But this uneasiness is offset by the negativity that had built up ahead of the breakout, in addition to the timing with respect to it occurring on the heels of the Fed holding rates steady. The negativity represents buying power that is necessary to fuel stocks higher. 

To give you a better perspective on this increased caution among market participants, below are some of the key sentiment facts that you have seen in this weekly commentary during the past month. During this time frame, the SPY made little to no directional movement from week to week, and experienced a couple tests of this year’s lows, as investors worried about the economy slowing and peak earnings: 

"I still find it encouraging for stock market bulls that the historically ‘wrong way’ large speculators in the weekly Commitments of Traders (CoT) report have a record net long position on VIX futures."
-- Monday Morning Outlook, April 16, 2018

"Fund managers' allocation to stocks is at an 18-month low and many believe the market has peaked or will peak this year, according to the latest Bank of America Fund Manager Survey ... The allocation to global technology shares also fell sharply -- to a five-year low, according to the Bank of America Merrill Lynch Fund managers' monthly survey."
-- CNBC, April 17, 2018

"…one theme that caught my eye last week were the comparisons to the sentiment backdrop at present relative to the time around the November 2016 election, when the market was struggling with election-related uncertainty and negative sentiment was building ... [O]ther sentiment indicators that we follow are also echoing the November 2016 time period, from newsletter advisor sentiment in the weekly Investors Intelligence survey to SPX component short interest, which is declining from 18-month highs."
-- Monday Morning Outlook, April 23, 2018

"Call it the running of the bears. With equities almost three months removed from the last record, Americans have grown less optimistic that the market will bounce back. For the first time since Donald Trump’s shock election in November 2016, a majority of consumers expect stocks to be lower 12 months from now, according to the latest sentiment reading from the Conference Board."
-- Bloomberg, April 24, 2018

"Investors are dumping U.S. stock funds at one of the fastest paces in a decade as rising market turbulence erodes confidence in the nine-year-old bull market. U.S. equity mutual funds and exchange-traded funds recorded $2.4 billion in outflows for the week ended April 18, according to the Investment Company Institute. That followed $41 billion in outflows from these funds in February -- the biggest monthly exodus since January 2008, ICI data show. Overall, investors have yanked $67 billion out of these stock funds since the start of February."
-- The Wall Street Journal, April 26, 2018

One scenario is the SPY rallying into mid-June and testing the mid-March highs at $280. Circle June 12 and June 13 on your calendar, with June 12 marking the date that President Donald Trump will meet with North Korean leader Kim Jong Un. But as much press as this meeting will receive, the meeting that could have heavier market implications is the Federal Open Market Committee (FOMC) gathering on June 13. 

Currently, fed funds futures players are factoring in a 100% probability of a rate hike on June 13. If the market rallies into this meeting, I could see a scenario in which the sentiment landscape is not nearly as negative relative to that which preceded the May 2 FOMC meeting. In other words, market participants could become more comfortable with stocks on the eve of a June rate hike, which has tended to precede weakness in stocks the following month.

"...as expiration nears and the SPY remains above both $250 and $260, one might expect a slow, gradual unwinding of short S&P futures positions related to these big put strikes. Time is on the side of the bulls as long as the SPY remains above $260 in the weeks ahead."
-- Monday Morning Outlook, May 7, 2018

If a pullback occurs this expiration week, bulls want to see support on the SPY come into play between $266.86 -- its 2017 close -- and the $270.43 level discussed above.  Open interest in the options market, however, remains a source of potential buying power, albeit slightly different from what we may have witnessed last week. 

For example, last week’s strength may have been helped along by the unwinding of short positions related to heavy put open interest at strikes immediately below the market. As the SPY moved further above these heavy put strikes, the delta -- or sensitivity of these options to SPY movement -- decreased and, as such, many of the short S&P futures positions associated with this put open interest were likely covered.  Now, the SPY is in an area of heavy call open interest at the 272 and 275 strikes, and this open interest was mostly buy-to-open volume. So, there is the possibility that the 275 strike acts as a magnet, as sellers of the calls are forced to buy S&P futures to maintain a neutral position in a process called delta-hedge buying.   

The risk this week is the SPY trading below the 272 and 275 strikes. In this instance, the longer it remains below these strikes, the more apt that long S&P futures positions at 272 and 275 are unwound, creating a modest headwind. 

Continue reading:

• Indicator of the Week: 3 Charts That Say the Time to Sell is Now
• The Week Ahead: Walmart to Headline Week of Retail Earnings

Editor's note: This article was updated to correct SPY's March 21 closing level to $270.43.

Retail earnings season is heating up, with home improvement name Home Depot Inc (NYSE:HD) scheduled to report its first-quarter results before the market opens tomorrow, May 15. The Dow stock has a history of muted earnings reactions -- averaging a next-day move of just 1.5% over the past eight quarters -- and options traders appear to be betting on more of the same.

Specifically, HD's May 182.50 put has seen the biggest rise in open interest over the last two weeks, with 7,255 contracts added. Data from Trade-Alert indicates the bulk of this action occurred last Thursday, May 9, when several mid-sized blocks were sold to open. If this is the case, the traders expect Home Depot to settle north of $182.50 at this Friday's close, when front-month options expire.

However, the put writers may also be betting on a post-earnings volatility crush. Heading into a known event like earnings, volatility is often bid higher, creating richer premiums. After the uncertainty of the event is lifted, implied volatilities tend to drop sharply -- a potential boon for premium sellers. Most recently, the implied volatility (IV) term structure for front-month HD options was 38.03%, compared to the monthly June options IV term structure of 21.86%.

Although HD stock's recent history of earnings reactions has been mostly negative -- the shares have closed lower the day after their report in five of the last eight quarters -- the current trend appears to be to the upside. The security is up almost 12% since it bounced off its 200-day moving average in early April, last seen trading 0.2% higher at $190.67. Above here, though, is potential resistance near $192.40, which is a 23.6% Fibonacci retracement of HD's rally from its July lows to its January record high at $207.61.

Against this backdrop, sentiment outside of the options arena is upbeat. Of the 27 brokerages covering Home Depot shares, 22 maintain a "buy" or better rating, with not a single "sell" to be found. Plus, the average 12-month price target of $211.24 is a 10.4% premium to current trading levels.

Shorts have been hesitant to bet against HD stock, too. The 9.8 million shares sold short represent less than 1% of the equity's available float, and would take just two days to cover, at the average pace of trading.

Western apparel retail chain Boot Barn Holdings Inc (NYSE:BOOT) is slated to report its fiscal fourth-quarter results tomorrow after the market closes. On the charts, BOOT has had a strong run, gaining 150% over the past nine months, and today reaching a more than two-year high of $22.17. The stock has also established a floor at the $17 level in recent months, which acted as support for BOOT when it first began trading back in late 2014.

Digging into earnings history, BOOT has posted a positive return the day after five of the company's last seven reports. In fact, last November, the retail stock posted an impressive 17.9% gain the day after earnings. Currently, the stock sports an average post-earnings swing of 6%, regardless of direction. This time around, the options market is pricing in a 19% next-day move, per data from Trade-Alert. From the equity's current price of $21.75, a move of this magnitude to the upside would put the shares north of $23 -- territory not seen since August 2015.

Boot Barn stock is heavily shorted, too. The 5.15 million shares sold short represent 26.3% of the equity's available float. At BOOT's average daily trading volume, it would take more than two weeks for the shorts to cover their bearish bets -- meaning there's ample fuel for a short squeeze, should the shares continue their run higher.

Analysts, meanwhile, are mostly upbeat toward Boot Barn ahead of earnings, with six of seven brokerages maintaining a "strong buy" rating. However, the stock's average 12-month price target comes in at $22.56 -- a slight premium to current levels. This leaves the door open for price-target hikes on strong earnings report.

Nvidia Corporation (NASDAQ:NVDA) has been trending higher over the past two years -- up more than 500% from its May 2016 lows south of $40. While the shares have pulled back since last Thursday's earnings-related record high of $260.50 -- down 4.6% today at $243.61 -- they appear to be finding a foothold in the $240 region, home to its early May pre-bull gap levels. If history is any guide, the chip stock could take a big bounce in the next few weeks.

Specifically, implied volatilities on Nvidia's front-month options plummeted in the wake of last week's earnings report. Most recently, NVDA's Schaeffer's Volatility Index (SVI) was docked at 31.8% -- in the 10th percentile of its annual range, suggesting premium on short-term contracts is relatively cheap at the moment, from a volatility perspective.

According to data from Schaeffer's Senior Quantitative Analyst Rocky White, there have been seven other times since 2008 NVDA has been trading near 52-week highs with its SVI ranked in the lower fifth of its annual range. This has resulted in an average one-month gain of 5%. Another rally of this magnitude would put Nvidia shares back above $256.

Those looking to bet on another breakout may want to consider using options. In addition to the relatively low implied volatilities, NVDA's Schaeffer's Volatility Scorecard (SVS) reading comes in at an elevated 95 out of a possible 100. This indicates the security has tended to make outsized moves over the past year, relative to what the options market has priced in.

There's still plenty of skepticism being priced into the shares, too, and a rebound could encourage the skeptical analyst crowd to upwardly revise their ratings. Ten of the 26 brokerages covering the tech stock still maintain a "hold" or "strong sell" rating, and upgrades could draw more buyers to Nvidia's table.

Video game maker Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is slated to report its fiscal fourth-quarter earnings after the market closes tomorrow, May 16. On the charts, TTWO is up roughly 20% from its recent lows near $95. Longer term, the stock has added 62% over the past year, and is within a chip-shot of its Feb. 1 record high of $129.25 -- even with today's 1.4% drop to trade at $112.84.

Digging into earnings history, TTWO has posted a positive return the day after six of the company's last eight reports. In fact, last August, the retail stock posted an impressive 12.2% gain the day after earnings. On average, the stock has swung 6.5% the day after its last eight quarterly events, regardless of direction. This time around, the options market is pricing in a 11.2% next-day move, per data from Trade-Alert.

In the options pits, TTWO call buying has been surging in recent months. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the security's 50-day call/put volume ratio at 4.04, ranking in the 87th percentile of its annual range. This suggests that calls have been bought over puts at a faster-than-usual clip during the past 10 weeks.

Analysts, have been upbeat toward Take-Two stock ahead of earnings, too, with 14 of 16 brokerages maintaining a "buy" or "strong buy" rating. Plus, the stock's average 12-month price target comes in at $130.15 -- a 15% premium to current levels.

Canadian Solar Inc. (NASDAQ:CSIQ) was able to snap an ugly streak of post-earnings performances back in March, when the shares gained 7.2% after the alternative energy company reported a better-than-expected fourth-quarter profit. The stock will try to carry this momentum into the next earnings release, scheduled for before the open tomorrow, while options traders have been targeting calls ahead of the event. 

But taking a quick step back, CSIQ has also benefited from California's recent decision to mandate solar panels on new homes, helping the equity extend its bounce from the $15 region that's provided solid support since last July. This rally has the shares back stop the 200-day moving average, which acted as a floor earlier today, with the security, last quoted at $16.78, now battling its year-to-date breakeven point.

As alluded to earlier, CSIQ options traders have been focusing on calls in recent weeks, according to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). More than 1,000 long calls were opened across these exchanges in the past two weeks, compared to fewer than 300 puts. Looking closer, the in-the-money July 16 call saw the largest increase in open interest during this time frame.

This heavy call activity is continuing today, with volume nearly double that on the put side. Glancing at some of the most popular options, new positions are being opened at the weekly 5/25 17.50-strike call, which could mean bulls are betting on more upside through the end of next week, when the contracts expire.

Overall, Canadian Solar stock has averaged a one-day swing of 8.7% the day after earnings, going back two years. The options market is expecting a similar move this time around, too, with implied volatility data pricing in a 8.5% move for tomorrow's session.

At this time last year, there had been only three days in which the S&P 500 Index (SPX) moved by at least 1%. That's absurdly low. This year is quite a bit different, as the number of 1% days has spiked to 32. That's only one more day than we saw in all of 2016, but it’s the highest number since 2009. This week, I’m looking at how this year compares historically -- and whether we can gain any insight into what it means for stocks the rest of the year.

More 1% Moves Than Usual By Mid-May

Here’s a histogram of S&P 500 data since 1929 to give us an idea about how many 1% days we should expect by mid-May. The red-colored bar indicates where this year falls. The average number of days is 21, with the median being 17. So, this year’s total of 32 one-day moves of 1% is well above average.

Stocks Are Underperforming in 2018

Stocks are typically more volatile going down than going up. The data in the table below, therefore, is not a surprise. It shows the performance of the S&P 500 through mid-May based on the number of days in which the market moved up or down by at least 1%.

During years with fewer than 10 1% days, the index averaged a 4.80% return, with 83% of the days positive. When there were more than 40 days with 1% moves by mid-May, the average return was a loss of 2.71%, and only 20% of the returns were positive. Since there have been 32 days of 1% moves so far this year, that puts us squarely in the third bracket. The S&P 500 is up a little more than 1% year-to-date, so stocks are underperforming some this year, even considering the high number of 1% days.

Where Do We Go From Here?

More importantly, though, is where do we go from here? The table below shows how the S&P 500 has done for the rest of the year based on the number of 1% days. Three of the four brackets look very similar if you focus on the average return and percent positive. The outlier bracket, oddly enough, is that third bracket when there’s between 21 and 40 days of 1% moves -- the bracket that we find ourselves in now.

This bracket shows an average return of just 0.25%, with 55% of the returns positive. The other three brackets all average between 5.31% and 6.31% S&P returns, with 70%-73% of the returns positive.

Simple randomness is the most likely explanation on why that third bracket underperforms, rather than there being some sort of anti-sweet spot for the number of 1% days at this point in the year. However, let’s break down those 29 returns a little further and see what happens

Rest-of-Year Returns Based on Year-to-Date Performance

First, I broke down the returns by the year-to-date return so far. Earlier, I mentioned the S&P 500 was positive by a little over 1%, and that puts us in that middle bracket. Interestingly, when stocks have been negative in this situation, then the rest of the year averages a loss of 2.83%, and when they have gained by more than 10% at this point in the year, they average a loss for the rest of the year of 2.51%. Years in which the index is up moderately with between 21 and 40 days of 1% moves, like this year, the S&P 500 averages a 6.8% return for the rest of the year, with 67% of the returns positive.

SPX Returns Based on Big Up Days

Here’s one more way I broke it down. I found that of the 32 days in which the S&P 500 moved 1% this year, 18 of them were positive, or 56%. Look at what happens when I find the rest-of-year returns based on this.

Again, we find ourselves right in a sweet spot. A good sweet spot, not an anti-sweet spot. When fewer than half of the 1% days are up days, the index averages a slight loss for the rest of the year. When more than 60% of the days were up days, then the index has performed awfully the rest of the year, losing 5.83%, on average.

However, when more than half but less than 60% of the days are up days, the rest-of-year returns have been rather good, with the SPX averaging a gain of 7.66% with 71% of the returns positive. So, if you were alarmed by the anti-sweet-spot data above, hopefully the last two tables calmed your fears some.

The high number of 1% days so far this year is interesting and tells us a little about the current environment. The rest-of-year data based on this, though, I would take with a grain of salt. I’m inclined to chalk it up to randomness. That’s a much more likely explanation than suggesting anti-sweet spots and sweet spots.

Retail earnings are in full swing, with Macy's (M) strong quarter giving a lift to the broader sector today. Shares of Nordstrom, Inc. (NYSE:JWN) are up 0.6% at $50.15 ahead of the department store's own first-quarter results -- due out after tomorrow's close -- even after a Securities and Exchange Commission (SEC) filing showed David Einhorn's Greenlight Capital dissolved its stake in the retailer.

Looking closer at the charts, JWN's price action in has been choppy in 2018, though its 200-day moving average has served as a floor since the stock gapped above this previous layer of resistance in late November. While the security bounced from here on April 19, its short-lived mid-May pullback was cushioned by the 120-day trendline. Year-to-date, the shares are currently maintaining a nearly 6% lead.

History suggests this volatility could continue in Friday's trading. Over the past eight quarters, JWN stock has averaged a single-day post-earnings move of 6.1%, with the options market pricing in an even bigger 10.6% swing this time around, regardless of direction. A move of this magnitude to the upside would put Nordstrom stock north of $55 for the first time since December 2016, while a swing to the downside would have the shares testing support at their 200-day trendline.

There's plenty of skepticism being priced into Nordstrom shares ahead of earnings -- which could help spark a rally on a positive earnings reaction. While short interest is down 17.3% since mid-March, there are still 16.18 million shares dedicated to these bearish bets. This represents 14.1% of the stock's available float, or 10.2 times its average daily pace of trading.

Elsewhere, 11 of 13 analysts covering the retail stock maintain a "hold" or "sell" rating, and the average 12-month price target of $51.19 is roughly in line with the equity's current perch. This leaves room for a round of upgrades and/or price-target hikes should JWN stock rise in the session immediately after earnings -- just as its done in five of the last eight quarters.

Video game stocks Electronic Arts Inc. (NASDAQ:EA) and Activision Blizzard, Inc. (NASDAQ:ATVI) were the subject of bullish brokerage notes today, and are trading higher as a result. Traders looking to take advantage of the price action may want to do so with options, which are attractively priced on both stocks at the moment. 

Electronic Arts Stock Rallies Off Double-Barreled Support

At last check, Electronic Arts stock was up 0.4% at $130.40, after the regulatory filings revealed Third Point and Jana Partners took stakes in EA. In addition, SunTrust Robinson issued a price-target hike to $140 from $135, which sits north of last Friday's record high of $134.58. Overall, the shares have added 24% in 2018, with the recent pullback contained by both the 160- and 200-day moving averages.

The bullish analyst attention is nothing new for EA. Exactly 80% of brokerages covering the security rate it a "buy" or "strong buy," with not a single "sell" on the books. Plus, the stock's average 12-month price-target of $143.24 is a 10% premium to EA's current perch. 

It's also worth noting that EA stock currently sports a Schaeffer's Volatility Index (SVI) of 24%, which ranks in the 16th percentile of its annual range. This suggests that near-term options are pricing in relatively low volatility expectations at the moment, which could help maximize the benefit of leverage for premium buyers.

Morgan Stanley Boosts Its ATVI Stock Bull Case to $100

Activision Blizzard stock also received bullish analyst attention this morning, with Morgan Stanley raising its bull case to $100 -- citing growing popularity of the company's Overwatch League. At last check, ATVI stock was up 0.7% to trade at $70.70 in response. The shares briefly pulled back after racing to a record high of $79.63 on March 12, but have since bounced from support at their 200-day moving average, a trendline that caught a previous pullback in December. 

In the option pits, traders have been more bearish than normal in recent weeks. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the security with a 10-day put/call volume ratio of 0.75, ranking in the elevated 79th annual percentile. While the low absolute ratio indicates more calls than puts have been bought to open, the high percentile suggests the rate of put buying has been accelerated relative to call buying lately.

Regardless of direction, those purchasing premium on the video game stock are in luck. The stock's SVI of 26% ranks in just the 11th annual percentile, suggesting short-term options are cheaper than usual, from a volatility standpoint.

Apple Inc. (NASDAQ:AAPL) blew up a lot of bear cases a few weeks back by posting better-than-expected quarterly results, and the stock continued to rally in the days that followed thanks to Warren Buffett's upbeat outlook. AAPL eventually hit a record high of $190.37 a week ago, and was last seen just below this mark at $187.48, bringing its year-to-date gain to nearly 11%. But while it may seen prospective options traders may have missed the Apple breakout, data suggests the iPhone maker could still be a strong target for call buyers.

Specifically, the security showed up on a list of names that have outperformed on the charts, yet have low volatility premiums for near-term options, measured by our Schaeffer's Volatility Index (SVI). This indicator for AAPL comes in at 18%, and ranks in just the 15th annual percentile. Said simply, it could be a good time to buy short-term options contracts.

According to Schaeffer's Senior Quantitative Analyst Rocky White, Apple has been in a similar position three other times since 2008, meaning it was trading near its 52-week high and had a low SVI. Looking at one-month returns after such "signals," the shares ended positive twice.

And although it would seem the tech giant has at least momentarily put fears of slowing iPhone growth to rest, there are a tony of Apple skeptics still hanging around. Most notably, almost half the analysts covering the stock have "hold" or "sell" ratings, and the average price target is just $195.96 -- a measly 4.4% premium to current levels. Considering all this, we could see more bullish brokerage notes come through and drive the equity even higher.

Deere & Company (NYSE:DE) is expected to report fiscal second-quarter earnings ahead of tomorrow's open. The stock has a history of positive earnings reactions -- closing higher in the session subsequent to the tractor maker's results in six of the past eight quarters. One options trader appears to be expecting on more of the same, but took a cautious approach to their bullish bet.

Specifically, it looks as if a long call spread was initiated last Friday on DE, with one trader buying the weekly 5/25 150-strike call and selling the 160-strike call for an initial net debit of $2.29 per spread, or $641,200 (2,800 contracts * premium paid * 100 shares per contract). The short call lowered the cost of entry of buying a call outright, while also dropping the breakeven mark to $152.29 (bought call + net debit).

However, the options trader has also forfeited the unlimited profit potential of a long call purchase. The maximum potential gain for this long call spread is limited to $7.71 per spread (difference between the two strikes less the net debit), no matter how far above $160 the stock may rise by expiration at next Friday's close.

At last check, DE stock was trading up 0.2% at $147.66. The shares have added 8.9% so far this month -- thanks to a sharp bounce off their 320-day moving average -- and appears to be forming an inverse "head and shoulders" pattern. Longer term, Deere shares are down 6% year-to-date.

 

Oil prices are on the rise today, with June-dated crude futures up 0.1% at $71.61 per barrel at last check. Energy stock Callon Petroleum Company (NYSE:CPE) is higher, too, gaining 4% to trade at $14.17.

This positive price action echoes the stock's longer-term trend, with CPE adding 16% in 2018. More recently, the stock pulled back to its 40-day moving average after hitting an annual high of $14.65. This could have bullish implications for the stock based on previous signals, and now may be the time to buy the CPE dip.

Over the past three years, there have been six occasions where CPE has come within one standard deviation of its 40-day moving average after an extended stint above this trendline, according to Schaeffer's Senior Quantitative Analyst Rocky White. One month later, the security was higher 83% of the time, averaging a return of 9.35%.

Should Callon Petroleum stock -- which flashed a different buy signal just last week -- continue to rally, an extended short squeeze could help keep the wind at the equity's back. Short interest fell by 3% in the most recent reporting period, yet the 40.09 million shares still sold short represent nearly 20% of CPE's total available float -- or 9.8 times the average daily pace of trading. 

And those wanting to bet on more upside for the oil stock may want to consider options. Specifically, CPE's 30-day at-the-money implied volatility of 40.6% ranks in the 10th percentile of its annual range. In other words, the equity's short-term options are relatively cheap at the moment, from a volatility perspective.