Rallying MedTech Stock Shows No Signs of Stopping

Several levels of support are firmly in place for Danaher stock

Jun 3, 2020 at 1:32 PM
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Medical technology provider Danaher Corporation (NYSE:DHR) has pulled back to its 40-day moving average, a historically bullish trendline. This area also happens to coincide with the 20% and year-to-date breakeven levels. So with the shares flagging in a cup-and-handle bullish pattern, and additional levels of support on the charts, there's reason to believe DHR has room to run on the charts.

WKALT Stock Chart DHR

 

Meanwhile, in the options pits, DHR sports a 10-day put/call volume ratio of 3.64 at the International Securities Exchange (ISE), CBOE Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits in the 88th percentile of its annual range, suggesting a healthier-than-usual appetite for long puts as of late. In other words, an unwinding of these bearish bets could help push the security higher.

Echoing this, the security's Schaeffer's put/call open interest ratio (SOIR) of 1.20 sits higher than 77% of all other readings from the past year. In simpler terms, short-term option players have rarely been more put-biased in the past 12 months. Digging deeper, there is peak put open interest located at the 150-strike, an additional layer of options-related support that could unwind and serve as a floor.

Lastly, now looks like an affordable time to purchase DHR options. This is per the stock’s Schaeffer's Volatility Index (SVI) of 26%, which sits in the 10th percentile of its annual range. Our recommended call option has a leverage ratio of 6.5 and will double on a 15.1% surge in the underlying stock.

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