Jefferies Dishes Out Bear Note on Outperforming Oil Stock

OAS shares are pulling back today as a result

Managing Editor
Jun 11, 2018 at 9:49 AM
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Oil-and-gas concern Oasis Petroleum Inc. (NYSE:OAS) is down 1.9% at $12.61 in early trading, after Jefferies downgraded the stock to "hold" from "buy." The note is somewhat surprising, since Oasis stock has been a recent outperformer, up 37.5% year-over-year coming into today, with the 20-day moving average providing support in recent weeks.

In the options pits, put buying has been more popular than normal. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows OAS with a 10-day put/call volume ratio of 0.55, ranking in the 90th annual percentile. This lofty percentile shows that puts have been purchased over calls at a faster-than-usual clip during the past two weeks. 

It's a prime time to purchase premium on OAS options, too. The equity currently sports a Schaeffer's Volatility Index (SVI) of 47%, which ranks in the 15th 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.

Meanwhile, short interest rose 11.4% during the most recent reporting period, and now represents over 18% of the stock's total available float. At Oasis Petroleum stock's average daily trading volume, it would take about four days for shorts to buy back their bearish bets.


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