BJ's Wholesale Club Stock Has Several Levels of Support in Place

There is plenty of room for upgrades among analysts

Apr 26, 2022 at 11:58 AM
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The shares of BJ's Wholesale Club Holdings Inc (NYSE:BJ) have recently found support at their February and March highs -- an area that coincides with the security's pre-earnings level. In addition, BJ's Wholesale Club stock is holding at four times its initial public offering (IPO) level. With this solid foundation in place, it's a good time to bet on BJ with calls.

BJ April26

There's room for upgrades from the brokerage bunch, which could send the shares higher. Specifically, six of the 12 analysts in coverage still rate the stock a "hold" or worse.

An additional unwinding of pessimism in the options pits could create even more tailwinds for BJ. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day put/call volume ratio stands higher than 82% of readings from the past 12 months. This indicates puts have been picked up at a quicker-than-usual clip in the last two weeks.

It's worth noting that BJ's Wholesale Club stock's options can be had at an affordable price, per its Schaeffer's Volatility Index (SVI) of 43%, which sits in the 34th percentile of its annual range. This suggests options traders are pricing in relatively low volatility expectations at the moment.

Our recommended call option has a leverage ratio of 5.28, and will double on a 19.12% rise in the underlying shares.

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