Navigation Stock Set Up Nicely for Bulls

There’s potential for a reversal of sentiment in the options pits

Nov 12, 2019 at 11:37 AM
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GPS specialist Garmin Ltd. (NASDAQ:GRMN) has been on a tear up the charts this year, already tacking on more than 50% year-to-date. Also fresh off a late-October post-earnings bull gap that lead to the stock’s nearly 12-year high, the equity is looking unstoppable. Plus, the company’s plans to roll out an automatic emergency landing system for commercial aviation could create extra buzz, making now the perfect time to buy calls on GRMN.

WKALT GRMN Daily

Looking at analyst sentiment, there remains plenty room for upgrades, as all six covering firms still carry a tepid "hold" or worse rating. In other words, a round of bull notes could draw buyers to GRMN's. Not to mention, put open interest outweighs call open interest, so there’s potential for a reversal of sentiment in the options pits, too, which could favor Garmin.

Another reason for more buyers to circle Garmin is the low implied volatility (IV). This points to relatively cheap premiums, per the stock's Schaeffer's Volatility Index (SVI) of 17%, which registers in the 13th annual percentile.

Finally, our recommended call has a leverage ratio of 13.5, and will double in value on a 6.9% rise in the underlying equity.

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