Buying Opportunity as Yum! Brands Stock Bounces from Support

A round of upgrades could fuel tailwinds for YUM stock

Dec 11, 2018 at 10:24 AM
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Taco Bell parent Yum! Brands, Inc. (NYSE:YUM) has shown resiliency during the recent broad-market sell-off, with all pullbacks since mid-October neatly contained by the stock's rising 80-day moving average. What's more, the security found a new layer of support at its +10% year-to-date return during last week's retreat from its Dec. 3 record high at $93.24.

yum daily chart dec 7

 

In spite of YUM's technical tenacity, eight of the 14 analysts covering the stock maintain a lukewarm "hold" rating. This leaves the door open for upgrades, which could draw buyers to the table.

It's an attractive time to buy premium on YUM, too, per the stock's Schaeffer's Volatility Index (SVI) of 21% -- in the 23rd annual percentile, meaning short-term options are pricing in lower-than-usual volatility expectations. Plus, our internal quantitative data shows the combination of low implied volatilities and high stock price has had bullish implications for YUM shares in the past.

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