KTOS has been on a dramatic upswing the past few months
San Diego-based Kratos Defense & Security Solutions Inc (NASDAQ:KTOS) is moving lower this afternoon, after tying its decade-plus closing high of $22.78 last night. Last seen down 1.5% at $22.44, KTOS' downtrend may be short-lived, per a fresh bull signal flashing on the equity. Below, we will take a look at recent data from Schaeffer's Senior Quantitative Analyst Chris Prybal, which suggests Kratos' stock may be ready for another surge higher.
KTOS has been on a dramatic upswing since its mid-May post-earningst bull-gap, as well as its surge off the supportive 180-day moving average. This trendline also served as support during pullbacks in the fourth quarter. Year-to-date, the security is up 60%.
Digging deeper, Kratos' short-term option premiums look relatively inexpensive at the moment. This is per the security's Schaeffer's Volatility Index (SVI) of 39%, which stands in the low 11th percentile of its annual range, as of Thursday's close. In other words, near-term options are pricing in relatively low volatility expectations.
Since 2008, there have been seven other times KTOS shares were within 2% of a 52-week high and simultaneously sported an SVI in the bottom 20% of its annual range. After those signals, the stock was higher one month later 71% of the time, averaging a gain of 6.6%, according to data from Prybal. Another surge of this size would put the shares at $23.92 -- a fresh 11-year high.
Albeit amid low absolute volume, calls look to be still flying off Kratos' shelves. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), KTOS sports a 10-day call/put volume ratio of 25.70, ranking in the 78th annual percentile. This means that approximately 25 calls have been bought to open for every put during the past two weeks on the equity.