Louisiana-Pacific Stock Bouncing Off Key Trendline

LPX short interest keeps rising while the stock rallies

Oct 12, 2021 at 2:49 PM

Manufacturing stock Louisiana-Pacific Corporation (NYSE:LPX) is forming a pennant pattern on the charts, with support from its 50-day moving average and its 2021 high, the latter of which happens to be its anchored volume weighted average price (AVWAP) level. Now, with the stock hovering near its +100% year-over-year level, it looks like the perfect time to purchase LPX calls.

Short interest is up 350% over the past year, with shorts suffering big losses, leaving plenty of potential for short covering.

An unwinding of pessimism in the options pits could push the equity higher as well. This is per the stock's 10-day put/call volume ratio of 1.95 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than all other readings from the past year, indicating a puts are more popular than they have been in 12 months. Plus, peak put open interest at the 60-strike could provide support.

Louisiana-Pacific stock's Schaeffer's Volatility Scorecard (SVS) ranks at 81 out of 100, suggesting the equity has exceeded options traders' volatility expectations in the last year. Our recommended January 21, 2022 call has a leverage ratio of 5.5 and will double on a 17.6% pop in the underlying equity.

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