Resilient Agricultural Stock Could Be a Haven Amid Market Volatility

The equity looks ripe for a round of bull notes, too

Mar 1, 2022 at 10:48 AM

Food processing name Bunge Ltd (NYSE:BG) is signaling a bull flag that put it in bullish engulfing territory yesterday as it pulled back to the 40-day moving average, which has been one of the more significant trendlines for the equity during past bull cycles. The security is now trying to make a break above the +10% year-to-date level, which could be cause for concern if BG didn’t exhibit impressive resilience during a particularly volatile week for markets. Plus, the stock recently saw a breakout above the $93 level, which is home to its 2014 and 2015 highs, and has been holding near an area that represents two times its 2016 lows over the past two days. Considering this promising technical setup, now looks like an ideal time to speculate on BG’s next leg higher with calls.

Even better for call buyers, the stock’s Schaeffer’s Volatility Scorecard (SVS) ranks at 88 out of a possible 100. In other words, the stock has tended to exceed options traders’ volatility expectations over the past year.

Bunge stock looks ripe for a round of bull notes, as its 12-month consensus price target of $117 is an 11% premium to current levels. What’s more, two of the four analysts covering the stock still consider it a “hold,” while the other two say “strong buy.”

With all that said, our recommended call option has a leverage ratio of 5.8 and will double in a 16.5% pop in the underlying shares.

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