Wingstop stock may have found a new area of support on the charts
Buffalo Wild Wing's rival Wingstop Inc (NASDAQ:WING) has recently broken above its +50% year-to-date breakeven level, which it was having trouble doing for most of November and December. This area could act as support, as well as the myriad of moving averages the equity has pulled back to in recent weeks. Specifically, WING has retracted to the breakout level of a medium-term five-to-six-month downtrend. In other words, now is an opportune time to buy calls.
Looking toward short covering, short interest on WING is well off its highs, but continued covering could still produce tailwinds. In fact, during the most recent reporting period, short interest rose 10.2%, and now accounts for 10.6% of the stock's total available float.
There is also room for upgrades, with six covering brokerages sporting a tepid "hold" rating on the equity. Lastly, premiums look attractive on WING at the moment, based on its Schaeffer’s Volatility Index (SVI) of 45%, which ranks in the 10th percentile of its annual range. Our recommended call has a leverage ratio of 5.35, and will double in value on a 18.5% rise in the underlying security.
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