Why Goodyear Stock Could Keep Rolling Higher

Goodyear Tire & Rubber shares are continuing to roll up the charts, but put buying is still popular

Jun 13, 2017 at 12:00 PM
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Tire manufacturer Goodyear Tire & Rubber (GT) has been a long-term outperformer on the charts. Year-over-year, the shares have added roughly 29.5%, and are back atop familiar support at the $34 level. In fact, GT recently pushed through the closely watched 50-day moving average, and could now be poised to take out its March highs.




There are plenty of skeptics across Wall Street, too, which may explain why there's almost no growth priced into the stock at the moment, illustrated by its price-to-earnings ratio of just 7.49 – one of the lowest in the S&P 500 Index (SPX). Plus, short sellers control 7.3 days' worth of buying power, based on average daily volumes. However, short interest is down 15.1% in the last two reporting periods, and if this trend continues, the stock could keep gaining on the charts.

It's also worth noting that short-term options traders are unusually put-skewed. This is based on Goodyear's Schaeffer's put/call open interest ratio (SOIR) of 1.80, which ranks in the 94th annual percentile. An unwinding of these seemingly bearish positions could help the stock, as well.

Finally, it's a good time to target GT options. This is based on the stock's Schaffer's Volatility Index (SVI) of 23%, which ranks in the low 8th annual percentile, hinting at low volatility expectations for near-term options.

Subscribers to Schaeffer's Weekend Trader Series options recommendation service received this GT commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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