Live Nation Stock Could Burn Short Sellers

If bearish traders throw in the towel, it could result in tailwinds for LYV shares

Dec 12, 2017 at 10:15 AM
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Ticketmaster parent Live Nation Entertainment, Inc. (NYSE:LYV) has been a major outperformer in 2017, adding over 63% year-to-date. The shares notched a record high at the end of November, and have since pulled back to the 80-day moving average, which historically has been a bullish signal. With LYV seemingly bouncing from this trendline once again, it could be a good time to bet on its next leg higher.

LYV Daily With 80MA Weekend Alert

What may be most impressive about the stock’s rise is that it’s come against an explosion in short interest, which is now at a record high after more than quadrupling since February. In the last reporting period alone, these bearish bets rose by 12.8%. The equity’s ability to rally despite this increased selling pressure speaks to its technical strength, and if these bets begin to unwind it could result in an even more rapid rise on the charts.

Meanwhile, there’s sizable open interest at the 44 strike in the December and January 2018 options series. If these seemingly bearish traders throw in the towel, it could result in tailwinds for LYV shares.

Plus, the security has a Schaeffer’s Volatility Index (SVI) of 23%, which ranks in the low 18th annual percentile -- revealing lower-than-normal volatility expectations for near-term options. Finally, our recommended call has a leverage ratio of 6.5, and will double in value on a 15% increase in the underlying stock.

Subscribers to Schaeffer's Weekend Trader Alert options recommendation service received this LYV 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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