The 160-day moving average could give GEVO a leg up the charts
The shares of Gevo Inc (NASDAQ:GEVO) are down 3% at $7.22 this afternoon, though a reason for this negative price action was not immediately clear. The security has been struggling with overhead pressure at the $8.50 over the past couple of weeks, after it got knocked off its Feb. 12, three-year high of $15.57. Investors should not look away just yet, though. In addition to its jaw-dropping 810.9% year-over-year lead, GEVO's latest pullback has placed it near a historically bullish trendline, which could launch shares higher in the near future.
Diving straight in, the security just came within one standard deviation of its 160-day moving average, after floating high above this trendline since May. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, only one similar signals has occurred in the past three years. The equity enjoyed a positive return one month later, averaging a massive 52.8% gain. From its current perch, a similar move would put the Gevo stock over the $11 mark, which is a level shares haven't crossed since the aforementioned mid-February peak.
An unwinding of pessimism among short sellers could create even more tailwinds for GEVO. The 20.83 million shares sold short make up 10.5% of the stock's available float. In other words, these bearish bets would take almost two days to cover, at the security's average pace of daily trading.
That being said, now seems like an opportune time to bet on Gevo stock's next move with options. This is per the security's Schaeffer's Volatility Index (SVI) of 98%, which stands in the low 7th percentile of readings in its annual range. This means options players are pricing in low volatility expectations at the moment.