This Energy Drink Stock Has Plenty of Juice

Monster Beverage stock has options-related support in place

Apr 4, 2023 at 3:06 PM
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Monster Beverage (NASDAQ:MNST) just broke out of a large four-month basing pattern, after finding support at its year-to-date breakeven level. The shares are above the round $50 level, which was the round $100 level prior to the stock’s 2-for-1 stock split on 3/28. 

 

Monster stock’s gamma-weighted Schaeffer’s open interest ratio (SOIR) of 1.04 has been indicative of bottoms in price in the past. There is little call open interest resistance after the 55-strike, which will mostly evaporate after April’s expiration.
 
MNST’s 10-day put/call volume ratio of 4.24 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks higher than 92% of readings from the past year, leaving plenty of pessimism to unwind in the options pits. Analyst sentiment could shift following the recent price action as well, since 21 of the 26 in coverage carry a “hold” or worse rating, while the 12-month consensus price target of $55.17 is just a 2.2% premium to current levels.
 
Furthermore, the security is seeing attractively priced premiums at the moment, as its implied volatility (IV) ranks in the low 13th percentile.
 
Our recommended June call has a leverage ratio of 9.9, and will double in value on a 10.5% pop in the underlying shares.
 
Subscribers to Schaeffer's Weekend Trader options recommendation service received this MNST 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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