Why Options Bulls Should Target Blackstone Stock After Earnings

The equity could benefit from a shift in the options pits

Feb 1, 2022 at 11:39 AM

Blackstone (NYSE:BX) scored a 6.8% post-earnings pop last week, after the investment company reported a top-line beat for the fourth quarter. In response, the shares broke in a wedge pattern on the charts, and are testing the trendline once again, while trading back above the 200-day moving average. What's more, the equity is holding onto the round $100 level, as well as a July 2021 post-earnings gap that it recently filled. With this technical foundation in place, we're recommending a new long position on BX.

A shift in the options pits could help Blackstone stock move higher. This is per the equity's 50-day put/call volume ratio over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 84% of readings in its annual range. This suggests a much healthier-than-usual appetite for puts in the last 10 weeks.

A further unwinding of pessimism amongst the brokerage bunch could provide additional tailwinds. Of the nine analysts in coverage, three still rate the stock a tepid "hold."

It's worth noting that Blackstone stock's Schaeffer's Volatility Scorecard (SVS) sits at 91 out of 100, suggesting BX has exceeded options traders' volatility expectations in the past year. Our recommended call has a leverage ratio of 6.4, and will double in value on an 13.5% rise in the underlying equity.

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