Put Traders Cash in on Bank Stock Drop

SCHW is down over 38% year-to-date

Deputy Editor
Apr 10, 2023 at 2:43 PM
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Schaeffer's Expiration Week Countdown subscribers more than tripled their money with our suggested Charles Schwab Corp (NYSE:SCHW) April 54-strike put in three days. Below, let's dive into the telling points for this bearish bet, as well as how it played out so quickly. 

At the time of our recommendation on Sunday, April 2, SCHW was staging a bear pennant breakdown on the charts, and threatening to push below the $52 level. The shares were also pushing through a large put open interest (OI) level, with the weekly 4/6 48-strike put acting as a magnet. 

Short sellers were also piling on Charles Schwab stock, with short interest up nearly 41% in the most recent reporting period. The equity's Schaeffer's Volatility Scorecard (SVS) was also coming off its lowest level in years, a move that has typically preceded bearish price action. 

SCHW did in fact continue lower, allowing traders to collect the full 200% profit. The stock is now starting to rebound, last seen up 4.2% to trade at $51.42, though still sporting a 38.2% year-to-date deficit. 

SCHW April10

 

 

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