Short covering is accelerating into the end of the year
Subscribers to Schaeffer’s Weekend Trader options recommendation service received this PATH 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.
Software stock UiPath Inc (NYSE:PATH) broke out from a weekly base pattern last week, finding a low on Thursday near its summer 2022 highs. PATH’s price is now moving back into its March 2022 post-earnings bear gap, and could fill the drawdown in the coming months amid an unwinding of pessimism.
An unwinding of options traders’ pessimism could also bode well for the equity, per its Schaeffer’s put/call open interest ratio (SOIR) that ranks higher than 96% of annual readings. Further, the equity’s 50-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands in the 74th percentile of readings from the past 12 months, underscoring the recent uptick in bearish sentiment.
Options traders are in luck, as PATH sports a Schaeffer’s Volatility Index (SVI) of 50%, which ranks in the 13th percentile of its annual range. This means options traders are pricing in very low volatility expectations at the moment. Our recommended February call has a leverage ratio of 5.3, and will double on an 18.7% pop in the underlying shares.
Image and article originally from www.schaeffersresearch.com. Read the original article here.