CF looks like a good stock for call traders
Subscribers to Schaeffer's Weekend Trader options recommendation service received this CF commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.
CF Industries Holdings, Inc. (NYSE:CF) stock’s lower rail held its connecting May and January lows, as a confluence of its 20-, 50-, and 200-day moving averages provided support. The shares are now above the 160-day trendline, which capped price action before and after earnings, and are swinging to the positive side of their year-to-date breakeven level. Plus, the equity’s average volume-weighted average price (VWAP) and one-year point of control (POC) are acting supportive.
While CF attracted bull notes after the company’s quarterly report, there is still plenty of room for optimism. In fact, 13 of the 23 covering brokerages still call the equity a tepid “hold” or worse.
Options are reasonably priced, making this an excellent time to weigh in on CF. The stock's Schaeffer's Volatility Index (SVI) of 28% ranks in the low 10th percentile of its annual range, meaning options traders are pricing in low volatility expectations. Our May call has a leverage ratio of 7.8, and will double in a 13% move higher in the underlying shares.