Options Bulls Target AES After Recent Highs

Calls are running at 15 times what's typically seen

Deputy Editor
Nov 12, 2020 at 1:10 PM
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The shares of utility company AES Corporation (NYSE:AES) are down 2.7% at $20.72 at last check. Rallying since mid-June with support from the 40-day moving average, AES is up 74.8% in the last six months. Currently, the stock is still trading up near its Nov. 9 all-time high of $22.32.

AES Chart November 12

Analysts are unanimously bullish on AES stock, with all six in coverage sporting a "buy" or better rating. Meanwhile, the 12-month consensus price target of $22.25 is a nearly 8% premium to current levels.

The equity's positive price action has attracted options bulls as well. AES' 50-day call/put volume ratio of 45.19 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 88% of readings from the past year, showing a penchant for long calls of late.

Today, options traders are taking that confident sentiment to the extreme, with 40,000 calls across the tape so far -- 15 times what's typically seen at this point with call volume pacing for the top percentile of its annual range. The December 22 call, where new positions are being opened, is the most-traded option so far today. 

Now might not be a bad time to weigh in on these options, either. The stock's Schaeffer's Volatility Index (SVI) of 41% stands higher than just 14% of all other readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment. 

 

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