Near-term option traders are more put-heavy than usual on MNST
The shares of Monster Beverage Corp (NASDAQ:MNST) are up 1.3% to trade at $57.33 this morning, after being named a "top pick" at Credit Suisse. The brokerage firm glowed about the company's Reign performance energy drink, and said MNST stock's recent six-week drop makes for an attractive entry point for investors, calling the shares "cheap."
Earlier in the summer, the $66 level -- home to MNST's Feb. 28 annual high of $66.38 -- kept a tight lid on any stock breakouts. The latest rejection from this area in early August -- not to mention a poorly received earnings report -- has the shares down 11% this month, and trading in a tight range between $56-$58, with the 200-day moving average emerging as a recent ceiling.
In the options pits, the security's Schaeffer's put/call open interest ratio (SOIR) of 1.65 ranks in the 94th annual percentile. In other words, speculators are more put-heavy than usual, looking at options expiring in three months or less.
The good news for options buyers is that Monster's Schaeffer's Volatility Index (SVI) was perched at 27% and registers in the 17th percentile of its annual range. This indicates the equity's front-month at-the-money options have priced in lower volatility expectations just 17% of the time over the last year.
Plus, MNST has certainly been an attractive target for those buying premium during the past year, in the sense that it's made bigger moves than what the options market was pricing in. This is according to the security's elevated Schaeffer's Volatility Scorecard (SVS) reading of 88 out of a possible 100.