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
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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.

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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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