The shares are churning below their year-to-date breakeven mark
Shares of Kinder Morgan Inc (NYSE:KMI) have been trending higher since falling to their early April lows near $14.69. This recent rally pushed the oil stock right into overhead resistance at its 320-day moving average -- currently home to KMI's year-to-date breakeven mark -- which could signal a trading opportunity for short-term options bears, if history is any indicator.
According to Schaeffer's Senior Quantitative Analyst Rocky White, there have been four prior instances of KMI trading within one standard deviation of its 320-day moving average after a lengthy stretch of time spent below it (defined as 60% of the time over the preceding two months, and at least eight of the previous 10 trading days), looking back three years. This has resulted in an average one-month loss of 4.5% for the energy shares, with 75% of those returns negative.
These historical headwinds could be reinforced by an extreme amount of short-term call open interest. In fact, Kinder Morgan stock's Schaeffer's put/call open interest ratio (SOIR) sits at 0.22 and ranks in the 6th percentile of its annual range, indicating that calls handily outnumber puts among options set to expire within three months.
A round of bearish analyst notes could also put pressure on the shares. Of the 16 brokerage firms covering the oil concern, 13 currently offer "buy" or better recommendations. Plus, the average 12-month price target of $20.89 is a more than 16% premium to current trading levels.
Kinder Morgan will be in focus next week, with the company set to report second-quarter earnings after the market closes next Tuesday, July 17. The options market is pricing in a 3.6% next-day swing for KMI stock, regardless of direction, more than the 2.4% single-session post-earnings move the shares have averaged over the past eight quarters.