BIG has a lot of technical support on the charts
Trade name Big Lots Inc (NYSE: BIG) has climbed the charts for most of the year with the support of the 20-day moving average stocks since they topped their highs in Fall 2020. The $ 63.84 level, which is six times the March BIG low, and the $ 62.50 level that is home to the pre-profit closing price, were also held as support last Thursday. The + 50% year-to-date level of Big Lots was positive last week too, so now is a good time to speculate about the security’s next move with call options.
The stock’s 1.65 Schaeffer Put / Call Open Interest Ratio (SOIR) is higher than anything else last year, and unwinding some of that pessimism could result in a BIG spike as well. In addition, SOIR values above 1.00 have led to price reductions in the past.
Short sellers have been in cover mode lately, with short selling falling 13.3% over the last two periods. The 4.74 stocks shorts still account for a whopping 13.7% of the BIG float, which could help the stock gain some momentum if more of those shorts pull off the bearish train.
According to the security’s Schaeffer’s Volatility Index (SVI) of 52%, which is higher than just 2% of last year’s readings, big lots options can currently be a bargain, meaning options traders have relatively low volatility expectations at the moment. In addition, the Schaffer Volatility Scorecard (SVS) from BIG ranks 91st out of 100. This means the stock has tended to exceed those expectations – a good thing for option buyers. Finally, our recommended call option has a leverage ratio of 4.1 and will double as underlying equity increases by 25.4%.
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