Options Traders Love This Energy Stock

At least three analysts lowered their AR price targets in the last two weeks

Deputy Editor
Jan 19, 2023 at 1:28 PM
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Following a series of bear notes over the last 10 days, shares of hydrocarbon exploration company Antero Resources Corp (NYSE:AR) have drawn an unusual amount of options activity.

AR recently landed on Schaeffer's Senior Quantitative Analyst Rocky White's list of S&P 400 (SP400) stocks that have attracted the highest weekly options volume within the last two weeks. Per White, Antero Resources stock saw 85,638 calls and 66,154 puts exchanged over this 10-day period. The most popular was the January 35 call, followed by the February 30 call. At lats check, AR was trading at $28.75. 

MAO Chart January 192022

Between Jan. 10 and Jan. 17, four brokerages trimmed their price targets on the energy stock. Yet today, still nine of the 12 analysts in coverage rate AR a "strong buy," and the 12-month average target price of $43.86 is a hefty 52.2% premium to current levels.

Year-over-year, AR is up 54.1%, as part of the big energy stock boom of 2022. However, more recently the equity has struggled, losing nearly 22% in the last six months. Since a Dec. 1 gap lower, the shares' descending 30-day moving average -- a trendline that's alternated between support and resistance in the last 12 months -- has contained rallies, though a floor seems to be forming at the $28 level.

MAO AR Chart 2 January 192022

Though calls outpace puts on an overall basis, the stock now sports a 10-day put/call volume ratio that stands higher than 94% of annual readings, per data at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). What's more, AR boasts a Schaeffer's put/call open interest ratio (SOIR) that stands above 85% of readings from the past year.

Those looking to join these traders could do so for a bargain right now. This is per Antero Resources stock's Schaeffer's Volatility Index (SVI) of 56% that stands in the relatively low 27% annual percentile. This implies options traders are pricing in low volatility expectations at the moment.


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