Conagra stock has struggled on the charts over the past year
Packaged foods name Conagra Brands Inc (NYSE:CAG) has struggled to grasp a positive footing on the charts. The security has shed 20% over the past 12 months, and is trading near its pre-earnings gap close from late June, as well as its 2013 highs. In other words, now looks like the perfect time to buy puts.
More than 8,400 July 28 puts expired at the close last Friday, July 19, dwindling the odds of options-related support emerging at the strike. The equity also looks to be itching for downgrades, with nine of 11 analysts in coverage sporting a "strong buy" rating. Plus, the stock’s average 12-month price target of $32.15 stands 11% above current trading levels – leaving plenty of room for price-target cuts.
Finally, premiums look attractive on CAG at the moment, based on its Schaeffer’s Volatility Index (SVI) of 24%, which ranks in the 22nd percentile of its annual range. Our recommended put option has a leverage ratio of negative 8, and will double in value on a 10.6% decline in the underlying security.
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