Oil Stock Ripe for Bearish Bets

Downgrades could amplify selling pressure on EOG

by Research Dept.

Published on Aug 27, 2019 at 10:07 AM

In early August, oil name EOG Resources Inc's (NYSE:EOG) post-earnings pop was quickly halted at its 40-day moving average. The trendline was perched near $88 at the time -- a previously supportive region that also coincides with EOG's $50 billion market cap. The security is now trading below a trendline connecting higher lows since 2009, and more losses could be ahead for the energy shares.

WKEND EOG Chart Aug 23

Analysts have yet to adjust their ratings on a stock that's shed more than 17% in 2019, with 18 of 21 brokerages maintaining a "buy" or better rating on the equity. Downgrades could amplify selling pressure on EOG.

Meanwhile, short sellers have started covering during EOG Resources' downtrend, with these bearish bets falling nearly 19% in the last two reporting periods. Not only does the equity's inability to capitalize on this buying power point to underlying weakness, but these bearish bets account for just 1.6% of EOG's available float -- indicating a lack of sideline cash to fuel future rallies.

It's an attractive time to buy options premium on EOG stock, too. Its Schaeffer's Volatility Index (SVI) of 33% registers in the 32nd annual percentile, suggesting lower-than-usual volatility expectations are being priced. Lastly, our recommended put will hit its 100% target profit on a 13% drop in the underlying equity.

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


a schaeffer's exclusive

PLAY TRENDS LIKE A PRO!

5 tips to leverage profits in this FREE insider report!


 
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


The IRS Loopholes Retirees Need to Know
Click to continue to advertiser's site.
Another Week of Fresh Highs Amid U.S.-China Trade Developments, Earnings
Developments on a trade deal between the U.S. and China were closely followed this week
Call Traders Blast These 2 Surging Stocks
Both stocks are enjoying record weeks
The IRS Loopholes Retirees Need to Know
Click to continue to advertiser's site.