Here's Why Church & Dwight Stock Could Dip Even Lower

The stock has plenty of resistance in place

Aug 16, 2022 at 2:37 PM

Household product name Church & Dwight Co., Inc. (NYSE:CHD) is rolling over from a small bear flag, though its shares are failing at the 100-day moving average, which has been a significant trendline for the stock’s 10-year bull rally. Plus, with the stock breaking down below its Covid-era Anchored Volume Weighted Average Price (AVWAP), and the 90-strike call acting a level of resistance, now might be the perfect time to speculate on CHD’s next move with puts.

CHD wt repost

A further unwinding of bullish sentiment among options traders could also pressure the equity lower. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) recently rolled over from a 10-day call/put volume ratio of 9.47, which sat higher than 97% of readings from the last year. Similar surges in this ratio have pointed to negative price action in the past.

Puts are looking like the way to go, too. Church & Dwight’s Schaeffer’s Volatility Index (SVI) of 20% stands higher than only 20% of readings from the past year. This implies that options traders are pricing in relatively low volatility expectations of late. What’s more, the stock’s Schaeffer’s Volatility Scorecard (SVS) sits at 76 out of a possible 100, meaning the stock has tended to outperform said volatility expectations.

Finally, our recommended put option has a leverage ratio of 12.9 and will double in a 6.9% drop in the underlying equity.

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