CBS Stock Surrounded by Skepticism Despite Recent Uptrend

Near-term options traders have been more put-heavy than usual on CBS

Aug 15, 2017 at 10:53 AM

Media stock CBS Corporation (NYSE:CBS) has tacked on nearly 26% over the past year. More recently, the shares pulled back after hitting a near-term high of $68.75 in late July, but found support in the $64 region -- home to a trendline connecting a series of higher lows since June. The stock is also trading north of $63, which coincides with its year-to-date breakeven mark and 12-month moving average, as well as the $62 area, which is double its 2007 peak. With several layers of potential technical support in play, it seems like a prime time to bet on the equity's next leg higher.

There's plenty of skepticism to be unwound on this outperforming stock, too, which could translate into tailwinds down the road. For starters, the stock's 50-day put/call volume ratio of 1.00 ranks in the 75th annual percentile, indicating puts have been bought to open over calls at a faster-than-usual clip.

Plus, 11.06 million CBS shares are sold short -- representing more than a week's worth of pent-up buying demand, at the stock's average pace of trading. A capitulation from some of the weaker bearish hands could translate into tailwinds for the shares.

Finally, our recommended call has a leverage ratio of 7.0, and will hit its recommended target profit on a 13.7% rise in the underlying shares.

Subscribers to Schaeffer's Weekend Trader Series options recommendation service received this CBS 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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