A historically bullish signal could send the stock even higer
While many stocks have pulled back in November, shares of insurance name MetLife Inc (NYSE:MET) capitalized on October’s broad-market rally, breaking through a former ceiling near the $75 mark last week, and hitting a record high of $76.82 earlier today. MetLife stock isn’t showing any signs of slowing, either, as a historically bullish signal is flashing at the moment.
These highs come amid historically low implied volatility (IV) for the stock, which has been a bullish combination for MET in the past. Per data from Schaeffer’s Senior Quantitative Analyst Rocky White, there have been six similar instances during the past three years when the equity was within 2% of a 52-week high while its Schaeffer’s Volatility Index (SVI) sat in the 20th annual percentile of of lower. MetLife stock currently sports an SVI of 24%, which sits in the 7th percentile of its 12-month range.
Digging deeper, MET has averaged a 1.4% one-month return after these signals, with 83% of these returns being positive. From its current perch, this would put the equity at another record high of $77.50.
An unwinding of pessimism among options traders could create even more tailwinds. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 2.32 puts have been picked up for every call during the past 10 weeks. This ratio stands higher than all other readings from the past year, implying a much healthier-than-usual appetite for long puts of late.
Echoing this, the stock’s Schaeffer’s Volatility Index (SVI) of 1.36 stands in the 92nd percentile of its 12-month range. In other words, short-term options traders have rarely been more put-biased.
Image and article originally from www.schaeffersresearch.com. Read the original article here.