Bank Stock Battles Economic Pressure Despite Bull Note

Calls have been popular in the options pits

Deputy Editor
Jul 29, 2020 at 11:08 AM
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The shares of U.S. Bancorp (USB) are down 0.4% at $36.16 at last check, despite an upgrade from Deutsche Bank to "buy" from "hold." The analyst in coverage stays hesitant on bank stocks longer term, but believes the stock performance of quality banks such as USB should improve from this point on. 

So far, today's pullback has been caught by the $36 region, a familiar area of support. Currently seeing pressure from a slew of moving averages, the equity is down 38.7% year-to-date. 

Coming into today, 10 of the 17 analysts in coverage sport a "hold" rating, with four at a "strong buy" and the remaining three at a "sell" or worse. Meanwhile, the 12-month consensus price target of $42 is a 15.7% premium to current levels. 

In the options pits, calls are popular. USB's 10-day call/put volume ratio of 3.35 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is in the elevated 77th percentile of its annual range. In other words, traders are looking more bullish than usual. 

That said, options may be a good way to go when weighing in on U.S. Bancorp at the moment. The stock's Schaeffer's Volatility Index (SVI) of 38% stands higher than just 18% of all other readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment. 

 

 

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