Short Squeeze Could Push Exchange Operator Stock Higher

The stock is forming a flag and wedge-like pattern

Jul 15, 2020 at 12:14 PM
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Exchange operator Intercontinental Exchange Inc (NYSE: ICE) has found support at its year-to-date breakeven level, that happens to coincide with its $50 billion market cap. As the stock forms a flag and wedge-like pattern, there's additional support at its 160-day and 320-day moving averages. The former has been reclaimed this month so far, and the latter has marked multiple bottoms in the past.

There's pessimism abound among options traders, though. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ICE sports a 50-day put/call volume ratio of 1.71. This ratio ranks 2 percentage points from an annual high, and an unwinding of these bullish bets could add more pressure to the equity.
Lastly, ICE sports attractively priced premiums at the moment. It's Schaeffer's Volatility Index (SVI) of 28% ranks in the low 19th percentile of its annual range. Our recommended call option has a leverage ratio of 9.2 and will double in an 10.6% rise in the underlying stock.


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