ABNB looks like a good stock for call traders
Subscribers to Schaeffer's Weekend Trader options recommendation service received this ABNB 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.
Shares of Airbnb Inc (NASDAQ:ABNB) staged a breakout above their October and February highs, while also clearing the $156.20 level, which coincides with the round $100 billion market cap. The company’s new buyback program announced in mid-February also equates to 6% of that market cap.
Despite the stock trading at its highest level since April, analysts are still hesitant, leaving the door wide open for a round of upgrades and/or price-target hikes. Of the 33 firms in coverage, 23 rate ABNB a tepid "hold" or worse, while the 12-month consensus target price of $143.77 is a more than 10% discount to current levels.
Short sellers have been in covering mode since short interest peaked in September to levels not seen since Airbnb’s initial public offering (IPO). It would still take more than one week for these traders to cover their bearish bets, though, at the security’s average pace of trading.
It’s also worth noting that implied volatility (IV) is bringing options prices lower and is below 63-day historical volatility (HV). Our call option has a leverage ratio of 9.2, and will double in a 11% move higher in the underlying shares.