Options Traders Swarm PG&E Stock Amid Wildfire Allegations

Some are speculating PCG stock will bounce back this week

Oct 16, 2017 at 1:29 PM
facebook X logo linkedin


Options volume has been exploding on utility stock PG&E Corporation (NYSE:PCG) during the shares' three-day slide. Before last Thursday, PCG had an average daily options volume of just 237 contracts, a number that's jumped to 1,936 over the past three days. Today alone, more than 40,000 PG&E options have already been traded, as speculators react to headlines surrounding the company's involvement in the California wildfires.

A number of strikes are seeing heavy trading in today's action. Right now the top spot belongs to the October 60 call, and buy-to-open activity looks likely -- meaning a number of bulls expect the stock to rebound back to the round $60 level before Friday's close, when the front-month contracts expire. But the 50-strike put from the same series is seeing potential buying activity as well, so others expect PG&E stock to slide further on the charts this week. Already today, PCG stock fell as low as $49.83 -- a new two-year low.

The newfound demand for short-term options has driven up volatility expectations. Just today, the security's 30-day at-the-money implied volatility has jumped 19.3% to an annual high of 50.1%. This is also reflected in PCG's Schaeffer's Volatility Index (SVI) of 37%, which is at least an annual high. This means volatility expectations for near-term contracts are much higher than normal.

Outside the options arena, brokerage firm RBC weighed in bearishly on Friday by trimming its price target by $2 to $68, saying the company is at risk of being sued for property damages from the wildfires in California. And today, J.P. Morgan Securities and Wells Fargo dropped their respective price targets to $66 and $67, while Jefferies said, "We expect this to remain an overhang on the stock for some time."

Still, most analysts remain bullish on the equity. Of the eight brokerages tracking the shares, six have issued "buy" or "strong buy" recommendations, and PCG sports an average 12-month price target of $68.36.

PG&E stock has shed almost 23% since last Wednesday, including a more than 7% decline today to trade at $53.48. As alluded to above, the shares -- currently short-sale restricted -- earlier bottomed at $49.83, their lowest price since September 2015. As a point of reference, PCG's 200-day moving average stands at $66.50, and the stock was trading at a record high of $71.57 just over one month ago.

PCG stock october 16

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI