Molson Coors Brewing Stock Looks Set to Slide

A round of bearish brokerage notes could create headwinds for TAP

Jul 3, 2018 at 8:35 AM
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Beer maker Molson Coors Brewing Co (NYSE:TAP) has had a tough time on the charts, with the shares down roughly 21% year-over-year. Plus, a recent rally off the stock's May 4 multi-year low was swiftly contained in the $68-$70 region -- home to its pre-bear gap levels from early May and its 100-day moving average. With technical resistance in place, it seems like a prime time to initiate a bearish options trade on TAP.

tap daily chart june 29

Short sellers have created a steady stream of selling pressure on the stock, with these bearish bets up almost 97% since the start of the year. However, short interest on TAP currently accounts for a low 2.9% of the equity's float, meaning there's plenty of room for more bears to climb on board.

A round of bearish brokerage notes could create headwinds for TAP, too. Despite the stock's long-term technical troubles, six of 11 analysts maintain a "strong buy" rating, with not one "sell" on the books.

TAP's options are attractively priced at the moment, as well. The equity's Schaeffer's Volatility Index (SVI) of 22% ranks in the 8th annual percentile, meaning short-term options are pricing in relatively low volatility expectations.

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