Piping Hot Pizza Stock a Solid Bet for Options Bulls

Papa John's is ripe for round of analyst upgrades, too

May 27, 2020 at 1:58 PM
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Although disrupted in mid-March like most of the broader market, Papa John’s International, Inc. (NASDAQ:PZZA) has quickly rallied off its aforementioned $28.55 low and now sports a 23% year-to-date gain. Ahead of the market crash, PZZA was relatively consistent since mid-2019 and now is charging higher, making it the perfect time to buy calls.

 

WKALT PZZA May22

 

Digging deeper, analysts are evenly split amongst the equity. Specifically, six of the 12 covering brokerages sport a tepid "hold," recommendation, leaving plenty of room for upgrades should the bearish outlook begin to unwind.

Even further, short interest on Papa John’s stock has dropped 4.3% during the most recent reporting period and now accounts for over 17% of the equity’s total available float. At the stocks’ average pace of daily trading, it would take bears nearly five days to buy back their bearish bets.

Lastly, now looks like an affordable time to purchase PZZA options. This is per the stock’s Schaeffer's Volatility Index (SVI) of 51%, which sits in the 26th percentile of its annual range. Our recommended call has a leverage ratio of 5.7 and will double on a 16.9% surge in the underlying stock.

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