Short interest has shot 420% higher year-to-date on KDP
Beverage stock Keurig Dr Pepper Inc (NYSE:KDP) has been moving higher on the charts long term, recently seeing an extra push from a volatile post-earnings bull gap earlier this month. The equity has since pulled back from its Nov. 7 record peak, but still remains at twice its 2016 lows, pointing to potentially strong technical footing for KDP. With additional support at the 10-month moving average, the equity is roughly 18% higher year-to-date, and looks ready to move even higher.
Short interest has soared 420% year-to-date, and now accounts for nearly 15% of the stock’s total available float, or 16.5 times the equity’s average daily trading pace. Further, seven of the 12 covering firms still sport a tepid "hold" or worse rating, meaning there remains plenty of room for upgrades on the stock.
Lastly, short-term options premiums on KDP look relatively cheap at the moment, based on the equity's Schaeffer’s Volatility Index (SVI) of 22%, which ranks in the 21st percentile of its annual range. Our recommended call has a leverage ratio of 7.5, and will double in value on a 13.1% rise in the underlying security.
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