TAP looks like a good stock for call traders
Subscribers to Schaeffer's Weekend Trader options recommendation service received this TAP 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.
Molson Coors Beverage Co (NYSE:TAP) stock is breaking out from an ascending triangle, which is coincident with a level of high options volume and coincides with both its 50- and 200-day moving averages. Longer term, the shares have been moving higher since the brewing company’s better-than-expected earnings in mid-February.
Since December, short interest has risen 31%, now representing 6% of the stock’s available float. It would take six days for shorts to cover, at TAP’s average pace of trading. And with the shares at fresh six-month highs, bears may feel pressured to start buying back their bets.
An unwinding of pessimism amongst analysts could provide tailwinds as well. Of the 16 firms in coverage, only three carry a “strong buy” rating, with 12 a tepid “hold,” and one “strong sell.
Options are affordably priced at the moment, too. The stock's Schaeffer's Volatility Index (SVI) of 19% ranks in the 11th percentile of its annual range, meaning options traders are pricing in low volatility expectations. Our recommended call option has a leverage ratio of 13.7, and will double in a 7% rise in the underlying shares.