WEN Suffers Dizzying Drop After Q4 Report

Sentiment surrounding the security is still quite optimistic

Deputy Editor
Mar 3, 2021 at 11:06 AM
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Wendy's Co (NASDAQ:WEN) is dropping during this morning's trading. The equity was last seen off 4.3% to trade at $20.35 after it reported fourth-quarter earnings that missed expectations by a penny. Its revenue also missed the mark. On top of this, the company forecast a downbeat full-year outlook.

The fast food chain has made an incredibly impressive comeback from last March, quickly regaining support at its 20-day moving average. WEN is trading back below this trendline today, and has been waffling at this moving average since late-October, which is when WEN began its steady decline. The security is now down 8.7% for the year. 

Wendy's typically quiet options pits are popping today. So far, 1,447 calls and 372 puts have exchanged hands -- four times the intraday average. The most popular position is the March 20 call, followed by the 22 call in the same series. 

This preference for calls is nothing new, though. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), WEN sports a 50-day call/put volume ratio of 5.94, which stands higher than all other readings from the past year. Echoing this the stock's Schaeffer's put/call open interest ratio (SOIR) sits in the low 4th percentile of its annual range, suggesting short-term traders have rarely been more call-biased. 

Despite it's recent earnings report, WEN options can be had at a relative bargain. The security's Schaeffer's Volatility Index (SVI) of 44% stands higher than just 9% of readings from the past year. This implies option traders are pricing in relatively low volatility expectations at the moment. 

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