Prime Time to Buy Premium on Hasbro Stock

Hasbro has been surging up the charts in recent months

Sep 18, 2018 at 9:50 AM
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Toymaker Hasbro, Inc. (NASDAQ:HAS) has been climbing the charts since its late-April post-earnings plunge, and after gapping higher in July following an impressive earnings report, bounced off the supportive $97-$98 level. HAS is up 16% year-to-date, and is now trading north of the round-number $100 level, which is also double its notable 2011 peak. With this backdrop, now may be a good time for bulls to bet on the toymaker’s next leg higher.



Despite its technical outperformance, short interest on Hasbro stock has continued to rise. Specifically, since mid-April, the children’s toy manufacturer’s short interest has nearly doubled, and now stands at 7.91 million shares. These bears may soon begin to cover their losing positions, which could take 11 days to play out, at HAS' average daily trading volume.

Digging deeper, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows Hasbro stock with a 50-day put/call volume ratio of 1.43, ranking in the 79th annual percentile. This lofty ratio suggests puts have been purchased over calls at a faster-than-usual clip over the past 10 weeks, and an unwinding of pessimism in the options pits could push HAS to higher highs.

Finally, the equity's Schaeffer's Volatility Index (SVI) of 19% sits in just the 3rd annual percentile, revealing low volatility expectations are being priced into near-term contracts. Meanwhile, our recommended call option has a leverage ratio of 7.5, and will double in value on an 12.8% increase in the underlying security.

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