Delivery Stock Dips After Downgrade

UPS call traders have been active despite recent underperformance

Deputy Editor
Dec 26, 2023 at 10:23 AM
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United Parcel Service, Inc. (NYSE:UPS) stock is off by 0.3% to trade at $157.83 this morning, after Daiwa Capital downgraded the stock to "neutral" from "outperform" and kept its price target at $155. 

Earlier last week, UPS had rallied right into its overhead 160-day moving average. Year to date, United Parcel Service stock is down 9.1%, but has found some separation from its Oct. 27 three-year bottom of $133.68. 

Options traders have been overwhelmingly bullish toward the equity. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), UPS sports a 10-day call/put volume ratio or 1.63 that stands in the 78th percentile of readings from the past year.

Echoing this, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.52 ranks in the 8th percentile of reading from the past 12 months. In other words, an unwinding of pessimism in the options pits could generate tailwinds for UPS stock moving forward.

What's more, UPS sports attractively priced premiums. The stock's Schaeffer's Volatility Index (SVI) of 21% sits higher than 14% of readings from the last 12 months, suggesting options players are pricing in low volatility expectations for the security at the moment.


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