Are Halliburton Company (HAL) Bulls Feeling the Heat?

Option traders have turned bullish on Halliburton Company (HAL), which is staring up at trendline resistance

by Kirra Fedyszyn

Published on Mar 14, 2016 at 2:56 PM
Updated on Jun 24, 2020 at 10:16 AM

Oil-and-gas stock Halliburton Company (NYSE:HAL) is slumping today, last seen down 1.9% at $35.44, as crude oil slips. The Organization of the Petroleum Exporting Countries' (OPEC) latest report on global demand, alongside comments from Iran, have traders concerned about ongoing oversupply issues. So, could HAL's recent crop of option bulls be feeling the heat?

Since hitting a three-year low of $27.64 in mid-January, HAL has rallied 28.2% -- right into its descending 160-day moving average. This trendline has stifled several HAL rebound attempts since mid-2015, prior to which it acted as support. Amid the equity's recent surge, option traders have been backing off their bearish bets and eyeing further upside.

160314HAL

Specifically, HAL's 10-day call/put volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at 1.91 -- higher than 76% of all readings from the past year. That indicates speculators have been picking up HAL calls over puts nearly 2-to-1 over the last two weeks -- a much faster-than-usual pace.

However, now is an opportune time to buy premium on short-term Halliburton Company (NYSE:HAL) options. The stock's Schaeffer's Volatility Index (SVI) of 34% stands higher than just 26% of all other readings from the past 12 months, pointing to relatively low volatility expectations.

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