Coca-Cola Stock Pops on New Restructuring Plan

The equity is still down 12% year-over-year

Digital Content Manager
Aug 28, 2020 at 10:10 AM
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The shares of Coca-Cola Co (NYSE: KO) are up 1.2% at $48.82 this morning, after the beverage company announced a strategic plan to reorganize its business for future growth. The plan includes reducing global workforce through separation programs, with the company set to offer voluntary separation packages to 4,000 employees in Canada, the United States and Puerto Rico. 

On the charts, the stock has traded sideways for much of the past five months. After dropping to a seven-year low near the $36 level in March, Coca-Cola shares rallied back up to the $49 mark in in April, but were turned away by the round $50 area. Despite today's pop and a now 9.2% quarterly gain, the shares' 160-day moving average looms as resistance. Year-over-year, KO is down 12%.

Analysts are mostly optimistic towards the stock, with nine of the 13 in coverage sporting a "buy" or better rating, and the remaining four carrying a tepid "hold." Meanwhile, the 12-month consensus price target of $53.55 is roughly a 11% premium to current levels.

That upbeat sentiment is reflected in the options pits, where calls are overwhelming puts. In fact, 185,969 calls were were exchanged in the past 50 days, compared to 56,492 puts. However, KO's Schaeffer's put/call open interest ratio (SOIR) of 0.74 stands higher than 73% of readings from the past year, implying short-term options traders have been more put-biased than usual.

What's more, traders looking to speculate on KO's near-term trajectory should consider options. The stock's Schaeffer's Volatility Index (SVI) of 21% is in the 12th percentile of its annual range, suggesting short-term options are pricing in relatively low volatility expectations. In other words, Coca-Cola's near-term options are attractively priced at the moment.

 

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