Mizuho Moves In on Edison International Stock Amid Wildfire Backlash

Near-term options open interest on EIX shows a strong tilt toward puts

Nov 21, 2018 at 9:22 AM
facebook twitter linkedin

The deadly wildfires in California have resulted in a sharp pullback in shares of Edison International (NYSE:EIX). More specifically, the selling essentially began back on Nov. 9, when EIX shares fell more than 12%. The next session the stock traded as low as $45.50 after Morgan Stanley estimated huge losses in utility equipment. The shares have recovered some since then, closing Tuesday at $52.78, and one analyst sees more upside potential ahead.

Specifically, Mizuho this morning upgraded Edison International to "buy" from "neutral," though it also cut its price target to $57.50 from $62. The analyst tracking EIX thinks the potential upside potential outweighs the downside from the wildfire liabilities. For the record, the firm placed a write-off liabilities estimate for the company at $3.3 billion.

While the majority of analysts tracking the security have "hold" or "strong sell" ratings, there are still a number of other bulls out there besides Mizuho. By the numbers, five brokerage firms still have "strong buy" ratings on EIX, and the average 12-month price target is $67.09.

Not surprisingly, near-term options open interest has become unusually put-skewed. This is based on the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.02, which ranks in the 87th annual percentile. This hints at a rare level of skepticism among short-term speculators.


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 



Special Offers from Schaeffer's Trading Partners