Every day for the next two weeks, we're going to highlight one of Schaeffer's top 14 picks for 2021. Up today is an oft-overlooked retail stock. To access the entirety of the 2021 report, click here.

Meanwhile, short interest on the retailer has been declining since rallying off its summer lows. In fact, short interest now accounts for a heavy 39% of DDS’ float, which would take shorts sellers nearly 11 days to cover, at the stock’s average pace of daily trading.

Lastly, and unwinding of bearish sentiment could trigger a fresh round of tailwinds, sending the security even higher in the coming year. First, in the options pits, puts have been popular for short-term traders, with the stock’s SOIR of 1.23 ranking in the 81st annual percentile. In terms of analyst attention, room for upgrades is plentiful, as all five covering brokerage firms sport a tepid "hold" or worse recommendation.  

Tony Venosa, CMT, is a Senior Options Strategist at Schaeffer's Investment Research. He's has over 20 years of trading experience under his belt -- including a stint in the mid-'90s clerking in the S&P 500 trading pits in Chicago, plus time spent as a commodity broker and proprietary day trader. A graduate of Miami University with a B.S. in finance and decision sciences, Venosa earned his Chartered Market Technician designation in 2008, and has been part of Schaeffer's in-house research team since 2010.

Truck manufacturer PACCAR Inc (NASDAQ:PCAR) just announced a partnership with self-driving car startup Aurora. The two firms plan on developing autonomous versions of PACCAR's Peterbilt and Kenworth trucks, with Amazon (AMZN)-backed Aurora providing its self-driving technology and PACCAR providing aftermarket parts distribution, as well as finance and transportation solutions. As a result, PCAR is up 3.5% at $92.35. 

Today's bump brings PCAR closer to its Nov. 9 record high of $95.05. In fact, the $92 level acted as a ceiling for the equity back in late October and early November. While the stock briefly overtook this region to hit that high, a near immediate pullback occurred. The $84 mark, which has acted as a floor since July, deftly captured this pullback, while the 140-day moving average also provided support on the charts. 

Despite its positive price action, analysts are still lukewarm on the security. Just four of the 15 in coverage call PCAR a "strong buy," while 11 say "hold" or worse. Meanwhile, the 12-month consensus price target of $94.48 is a slim 5.9% premium to current levels. 

Option bulls, on the other hand, are likely cheering today's positive price action. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), PACCAR stock sports a 50-day call/put volume ratio of 19.70, which stands higher than all other readings from the past year. This means calls have been picked up at an unusually fast pace compared to puts during the past 10 weeks.

Calls are king during today's trading, too. Within the first hour of trading, 163 calls have crossed the tape -- eight time the intraday average -- compared to 44 puts. Most popular is the March 92.50 call, where positions are being opened. 

The Cheesecake Factory Incorporated (NASDAQ:CAKE) is up 2.4% to trade at $42.56 today, a chip-shot from its Feb. 20 annual high of $43. Today's bump comes after Wedbush and Deutsche hiked their price targets to $49 and $47, respectively, and puts the stock's year-to-date gain already as 15%.

The analyst shift is no surprise, considering CAKE has nearly tripled off its March 17 decade lows of $14.52. Nevertheless, nine of 16 analysts in coverage maintain "hold" or worse ratings. Plus, the consensus 12-month price target of $37.41 is a 12.3% discount to its current perch. In other words, more bull notes could be on the horizon for the restaurant stock.

There are two competing indicators facing off for CAKE. First, there's the stock's 14-day Relative Strength Index (RSI) of 77, indicating that the stock is well into "overbought" territory. However at the same time, a healthy 26.6% of CAKE's total available float is sold short, and the ascending 80-day moving average has guided the equity higher in recent months.

Regardless of direction, now looks to be an attractive time to bet on the restaurant stock's next moves with options. This is per Schaeffer's Volatility Index (SVI) of 54%, which sits in the 10th  percentile of its annual range. In simpler terms, options players are pricing in relatively low volatility expectations right now.

Like all too many companies in the food and restaurant industry, The Cheesecake Factory posted some significant losses in 2020. The company lost about $300 million in net profits and revenue over the past year. CAKE also suspended its quarterly dividend back in May of 2020. However, The Cheesecake Factory has likely already endured the worst of the pandemic. With many other restaurants forced to close, CAKE investors are hoping the company can capture a greater percentage of the market share. CAKE’s historically sound revenue growth and its diverse restaurant concepts make the company an intriguing candidate to come out much stronger than it was prior to the COVID-19 pandemic.

New Residential Investment Corp. (NYSE:NRZ) is a real estate investment company headquartered in New York City. The corporation focuses on managing and investing in residential mortgage related assets. They also provides capital and services to the mortgage and financial services industries.

Last month, NRZ announced its fourth quarter 2020 common stock dividends. The board declared a quarterly dividend of $0.20 per share of common stock for the fourth quarter of 2020, representing an increase of 33% from its previous quarter’s common share dividend. This increase also brings New Residential Investment's forward dividend up to $0.80 and its dividend yield up to an outstanding 8.51%.

The company has paid dividends since 2013, but had cut its dividend in April of 2020 from $0.50 per share to $0.05 as a result of the COVID-19 pandemic. New Residential Investment has since raised its dividend every quarter by increments of $0.05.

It's been a rough 12 months for NRZ stock though. Sporting a 43% year-over-year deficit, the shares' slow climb out of its April 3 record lows has been recently stymied by their 320-day moving average.

New Residential Investment has beat Wall Street's expectations for earnings in three of its last four earnings reports. While earnings per share (EPS) reported shrank from $0.61 per share for the fourth quarter of 2019 down to $0.31 per share for the third quarter of 2020, NRZ outperformed expectations throughout the last 12 months. 

Overall, NRZ maintains its position as one of the most secure high-paying dividend stocks which is what attracts so much attention from the retail sector. The company quickly resumed its dividend growth following the COVID-19 blow it took, and is likely to continue doing so based on its fundamentals. Some of the most concerning aspects of investing long-term in NRZ are the company's large debt amount and the substantial revenue hit New Residential Investment took in 2020.

Blue-chip insurance stock Travelers Companies Inc (NYSE:TRV) is up 0.5% at $143.83 at last check, after earlier hitting $144.29 to surpass last session's annual high of $144.12. On its way higher since an early-November bull gap, TRV's latest pullback was caught by the 50-day moving average, with shares breaking through resistance at the $140 region last week. What's more, today's positive price action comes just ahead of the company's fiscal fourth-quarter earnings report, due before the open on Thursday, Jan. 21. 

Leading up to the event, the options market is pricing in a post-earnings move of 3.3%, which is just barely lower than the security's average post-earnings swing of 3.4% from the last eight reports, regardless of direction. A look back at these reports shows that TRV closed two of these next-day sessions higher, while one of those days was flat. However, it's worth noting that last quarter the stock experienced a 5.6% pop. 

Despite the recent rally, most analysts are hesitant toward the equity. Out of the 17 analysts in coverage, 13 carry a "hold" or worse rating, leaving plenty of room for a round of upgrades to act as a tailwind. 

Meanwhile, the options pits lean overwhelmingly bullish. This is per TRV's 10-day call/put volume ratio of 6.61 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 97% of all other readings from the past year, indicating calls are being picked up at a faster-than-usual clip. 

Now could be a good time to weigh in on these TRV options. The stock's Schaeffer's Volatility Index (SVI) of 27% stands higher than just 10% of all other readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment. 

When a new trader steps into the world of weekly options, it can be overwhelming the volume of data and screens that may be required to properly identify successful trades. While the general concepts remain similar to those of standard options, weekly options present a significant increase in expiration dates to choose from, which can lead to decision overload.

While we do believe that anyone can trade options with the right education and support, possessing a baseline of information about how weekly options work is important to taking the drivers seat in a trading portfolio and maximizing trade returns.

With the short-term nature of weekly options and the significant increase in expiration dates from which to choose, the amount of research and knowledge required to trade successfully increases as well. A great way to get started with capitalizing on the power of weekly options trading is to partner up with a well-respected industry professional. Using a credible newsletter, like the options newsletters provided by Schaeffer's Investment Research, is a great way to get off the ground in weekly options trading.

The major benefit of choosing one of the best weekly options newsletters is that these newsletters will provide you with real-time trade entry and exit instructions. The trade recommendations will have complete trade entry information provided, including the chosen strike price, expiration date, and maximum entry price. By letting the experts do the work for you, you can truly learn a lot simply by shadowing. Each trade recommendation will also come with a trading rationale explaining why the trade was identified as an opportunity at that moment and how the trade parameters were determined.

What to Look for when Subscribing to a Weekly Options Newsletter

The major items to look for when researching potential weekly options trading newsletters are all meant to ensure that you do not spend your hard-earned money with a company that does not have your best interest at heart. Not every options newsletter offers reliable and useful information. In fact, some options newsletters offer unsubstantiated results and absolutely no support. Be sure to invest in the right options newsletter by looking for the following characteristics:

• Performance-backed strategies: You will often come across options newsletters with outrageous promises or claims that they have found the 'million dollar formula' for trading weeklies. Remain vigilant of any strategies that seem too good to be true. It is absolutely possible, especially with options trading, to produce results that are genuinely as good as they look in marketing. Make sure the company can provide you with a complete track record to back up any claims that you think are questionable. Any reputable company will have quick access to a complete track record of their trades without any strange disclaimers about "hypothetical returns" or "these returns have not been verified." If you ever find yourself second-guessing a marketing claim, simply ask the company for more information that can verify it.
• Real-time trading advice: The volatility of the stock market can never be emphasized enough. One minute, your entire trading portfolio can be green. Two minutes later, 90% of your portfolio could dip into the red due to major price movement fluctuations. Never accept trading advice that is delayed. If a newsletter publisher is delaying their trading recommendations for any reason, malicious or not, just skip them. A true guide will be there to provide you with real-time trading alerts to get you the absolute best entry and exit pricing on all recommended trades. Hours and even minutes can make the difference in a profitable trade and a breakeven or losing trade. Timing is everything with short-term options trading like weekly options. The ideal weekly options newsletter will keep you in the loop real-time when trades are identified, either via email or text message.
• Trust the experts: There is no certification required for 'investment gurus' and this can create an air of mistrust in the options newsletter industry. Anyone could claim to be an expert without any experience at all. The first thing you want to look at when choosing an options trading newsletter is the trader behind it. Look for a trading expert who has been known in the industry for a minimum of 10 years. Look for a trading expert who has been featured in respected media outlets (for their analysis, not through paid advertising). Look for a trading expert who is recommended by others. We recommend checking Google as your primary source of the most unbiased reviews of all newsletter publishers. There are quite a few "investment review" websites that are, unfortunately, run by investment publishers themselves to defame others in the industry while propping themselves up.
• Confirm trading support: While newsletter publishers are not permitted to provide individualized trading advice (if you experience this, report it immediately to the SEC), a reputable newsletter provider will provide the highest possible level of support for their customers. Call the publisher you are considering and see how long it takes to speak with someone who can answer your questions. Check to see if the publisher has live chat on their website. Email the publisher and assess the length of time it takes to receive a response. As mentioned above, timing is everything. The best options newsletter publishers will provide immediate support, especially during market hours.

Schaeffer's Investment Research's Weekly Options Newsletters and Trade Alerts

Regardless of your level of experience with options trading, Schaeffer's offers the top-of-the-charts options newsletters and options trade alerts. We offers a variety of weekly options trade recommendation services including Schaeffer's Weekly Options Countdown, Schaeffer's Weekly Volatility Trader, and Schaeffer's Weekly Options Trader. Every one of these weekly options trade recommendation services provide exact entry and exit instructions for weekly options trades each month, as well as a detailed trading rationale for each trade so you can learn directly from our experts while still capturing profit in your own portfolio.

Every day for the next two weeks, we're going to highlight one of Schaeffer's top 14 picks for 2021. First up on the tee box is Callaway Golf (ELY). To access the entirety of the 2021 report, click here.

Back in late October and early November, golf equipment company Callaway Golf (ELY) carded two double-bogeys on the charts -- first gapping lower after the acquisition of entertainment company TopGolf and again when it suffered a Nov. 10, post-earnings drop of 2.6%. Since then, ELY has steadied itself and broken out of a technical downtrend to test old all-time-highs, culminating in a Dec. 17 peak of $24.49. The shares' multiple top formation has potential to break before the company's February quarterly report, while the cheaper implied volatilities between that time frame serve as an extra incentive.

As ELY clawed back above its year-to-date breakeven level in the last month or so, short interest remained near all-time high levels. More specifically, the 16.73 million shares sold short account for a whopping 19.3% of ELY's total available float, or seven days' worth of pent-up buying power, at the stock's average pace of trading.

These premiums are well-priced at the moment, too, per the stock's Schaeffer's Volatility Index (SVI) of 49%, which stands higher than only 9% of all other readings in its annual range. This implies that options players are pricing in relatively low volatility expectations at the moment. In conclusion, Callaway Golf is a $2.2 billion company, and the $3 billion level represents $31.70. With that in mind, keep an eye on the $30 level in 2021, as it is nearly double its post-earnings lows from November. 

Chris Prybal is a Senior Market Strategist at Schaeffer's Investment Research. A lifelong student of the markets, he made his first trades before he even began attending the University of Cincinnati, where he studied finance and treasury management. Prybal's areas of expertise include option premium buying and selling, and his equity and market research have been cited by Barron's, MarketWatch, Forbes, Investopedia, and the Cincinnati Business Courier.