Bearish Sentiment Could Spark Tailwinds for This Footwear Stock

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

Oct 9, 2018 at 11:27 AM
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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.

 

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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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