Financial Services Stock Slides on Downgrade

ALLY is trading at its lowest levels in nearly 2 years

Deputy Editor
Sep 23, 2022 at 10:18 AM
facebook twitter linkedin

Consumer lending stock Ally Financial Inc (NYSE:ALLY) is down 2.6% at $29.87 at last glance, after a downgrade from Wells Fargo to "equal weight" from "overweight," with a price-target cut to $32 from $40. The firm cited the most recent rate hikes from the Federal Reserve as well as a decline in used vehicle prices. 

This negative price action has ALLY dropping to its lowest level since November of 2020. Now down 37.1% year-to-date, the stock's 80-day moving average has kept a lid on rally attempts for the majority of this year. 

More bear notes could be on the way, as 15 of the 20 analysts in coverage carry a "buy" or better rating on the underperforming stock. Plus, the 12-month consensus price target of $44.74 is a 49.6% premium to current levels. 

Over in the options pits, puts have been popular. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 4.25 puts have been bought for every call in the last two weeks. 

It's also worth pointing out that ALLY ranks low on the Schaeffer's Volatility Scorecard (SVS), with a score of just 14 out of 100. In other words, the security has consistently realized lower volatility than its options have priced in, making the stock a potential premium-selling candidate.



Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

Schaeffer's Daily Bulletin Offer


Special Offers from Schaeffer's Trading Partners