Utilities Stock for Contrarian Options Traders
Vistra Corp (NYSE:VST) is up 0.9% to trade at $160.41, fighting to break back above its year-to-date breakeven mark. VST has struggled to regain momentum since falling from its September and October highs. However, per Schaeffer's Quantitative Analyst Rocky White, a bull signal looks to be flashing that indicates VST's slump may be near an end.
Vistra stock’s buy-to-open put/call ratio just hit the 90th percentile and crossed over 1.0. Per White, in the last three years that’s occurred eight other times for the utilities name. The stock has averaged a 5.4% return 21 days later with an 75% success rate.
From its current perch, a move of this magnitude would give the shares some separation from their year-to-date breakeven level, and testing the upper rail of a downtrend channel formed from late-September peaks near $220.
Options look like an affordable way to, too. This is per Schaeffer's Volatility Index (SVI) of 59% that stands higher than 20% of all other readings from the past year. In other words, near-term option traders are pricing in relatively low volatility expectations.
Things are looking up for premium sellers, too. This is per the stock's Schaeffer's Volatility Scorecard (SVS) of 5 out of 100, which indicates VST has consistently realized lower volatility than its options have priced in.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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