Bearish Sentiment Could Spark Tailwinds for This Footwear Stock

Upgrades and/or short-covering could fuel bigger gains for CROX stock

by Research Dept.

Published on Oct 9, 2018 at 11:27 AM

Footwear stock Crocs, Inc. (NASDAQ:CROX) sports an impressive 12-month advance of nearly 100%, climbing to multi-year highs in the process. Following a slight pullback in recent weeks, the shares are hovering near familiar support in the form of the 80-day moving average. Considering sentiment is still quite bearish, CROX could rally from this bullish trendline as bears continue to hit the exits.




The disrespect for CROX begins in the analyst community, where just one of the six brokerage firms in coverage recommend buying the security. Moreover, the average 12-month price target among this group is below current trading levels, so the door's wide open for upgrades and/or price-target hikes to come through on the outperformer, which could provide more tailwinds.

Short interest is also very high, accounting for almost 16% of the total float, and it'd take more than nine days to cover, based on average daily volumes. Elsewhere, October options expiration is very put-heavy at the moment, hinting at potential options-related support going forward, as well.

Lastly, the stock's Schaeffer's Volatility Index (SVI) of 42% sits in the 9th annual percentile, revealing low volatility expectations being priced into near-term contracts. Our recommended call option currently sports a leverage ratio of 4.3, and will double in value on a 22.4% gain in the underlying security.

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