American Express Stock Pulls Back After Wall Street Journal Report

American Express' forex department is in hot water

Managing Editor
Jul 30, 2018 at 9:42 AM
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American Express Company (NYSE:AXP) stock is trading down 2.3% at $101.46 this morning, after the Wall Street Journal reported the financial concern's foreign exchange department (subscription required) has been secretly raising its clients' currency conversion rates. The practice, which was an attempt to boost revenue and employee commission, has reportedly been going on since 2004. 

American Express stock is fresh off a record high of $104.23 on Friday. However, today's pullback takes the stock just above its year-to-date breakeven level. The shares are now testing their 20-day moving average, a trendline that acted as strong support earlier this month.

Analysts are relatively split over the Dow name. Exactly 40% of the brokerages covering AXP rate it a "strong buy," while the other 60% rate it a tepid "hold." In addition, the security's consensus 12-month price target of $111.32 is a nearly 10% premium to the stock's current perch.

In the options pits, puts have become more popular lately. This is evident with data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) showing the security with a 10-day put/call volume ratio of 1.59, in the 76th annual percentile. 

Echoing this, American Express stock's short-term traders are more put-skewed than usual, with its Schaeffer's put/call open interest ratio (SOIR) of 1.53 ranking in the 93rd percentile of its annual range. This indicates that near-term put open interest outweighs call open interest by a wider-than-usual margin right now. Meanwhile, unusually low volatility expectations are being priced into near-term AXP options, based on its Schaeffer's Volatility Index (SVI) of 15% -- ranking in the low 14th annual percentile.

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