Option Bears Move in on Edison International Stock

Utility stock EIX has struggled in recent weeks amid the wildfires in California

Oct 30, 2019 at 10:14 AM
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Edison International (NYSE:EIX) has been in the headlines recently due to the California wildfires, along with peer PG&E, and the company last night admitted in its earnings call that its equipment likely played a role in the fire in Woolsey. EIX stock fell to $63.70 out of the gate, and was last seen at $65, down 0.6% so far. Meanwhile, recent data shows options traders have been buying puts to bet on a slide in the utilities stock.

Specifically, the 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) comes in at 3.53, showing more than three puts were bought to open for every call in the last two weeks. What's more, this reading ranks in the 73rd annual percentile, meaning this type of preference for long puts isn't normal.

During this time frame, two of the largest increases in open interest occurred at the December and November 65 puts. Data confirms buy-to-open action at both contracts, so traders are betting on EIX shares breaching $65 in the weeks ahead.

Despite the turmoil around the company, not many people have decided to short the stock. Short interest actually fell by 9.7% in the last reporting period, and now accounts for just 2.1% of the total float. Meanwhile, four of the nine brokerage firms in coverage still have "strong buy" ratings in place. But even without the wildfire drama, EIX may be a name that traders would have preferred to avoid, since it has historically been one of the worst stocks to own in November.


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