Why We're Buying Calls On Accenture Stock

This underloved stock will benefit as short sellers are forced out of their losing bets

by Research Dept.

Published on Aug 6, 2019 at 7:30 AM
Updated on Aug 6, 2019 at 7:30 AM

Consulting name Accenture Plc (NYSE:ACN) has been climbing the charts long term, and following its recent pullback, is nearing the historically bullish 40-day trendline. The stock has bounced from its 40-day moving average several times over the course of its 37% year-to-date gain. With ACN having worked off its late-July overbought condition and eyeing another bounce higher, now is the perfect time to buy calls.

WKEND ACN Chart with 40MA

Despite the stock's long-term positive price action, short interest on the security has increased by 43% since the start of April. At ACN’s average daily trading volume, it would take these shorts nearly four days to buy back their bearish bets, leaving the stock to benefit if skeptics are forced out of their losing positions.

Lastly, it's an attractive time to purchase premium on the equity. This is based on its Schaeffer’s Volatility Index (SVI) of 18%, which ranks in the 23rd percentile of its annual range. Plus, our recommended call option has a leverage ratio of 9.2, and will double in value on a 10.3% rise in the underlying security.

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