Grocery store inventory and analysis

A historic bullish signal could help security hit its most recent high

The stocks of retail concern Big Lots, Inc. (NYSE: BIG) rose 1.6% to $ 71.82 on the last check, after previously hitting an all-time high of $ 72.27. The stock is an impressive 492.5% year-over-year, aided by the 40-day moving average. The even better news is that BIG appears to have room to run due to a historically bullish signal that could catapult the stock to even more records in the coming weeks.

In particular, the highlight of Big Lots stock lies in its historically low implied volatility (IV), which has historically been a bullish combination for the stock. According to Schaeffers Senior Quantitative Analyst Rocky White, there have been two more times in the past five years that the stock has traded within 2% of its 52-week high while its Schaeffer Volatility Index (SVI) was in the 20th percentile of its annual range or lower. This is currently the case with the equity SVI of 52%, which is in the second percentile of its 12-month range.

White’s data shows that a month after these signals BIG was higher, producing an average return of 10.7% for that period. From its current location, a similar move would bring security to the $ 79.50 mark, a brand new all-time high.

BIG 40 days

The analysts are still pessimistic about Big Lots shares and leave enough room for price target increases and / or upgrades in the future. Of the eight analysts in question, six call it a lukewarm “hold” or a poorer rating. Additionally, the 12-month consensus target of $ 60.50 is a discount of 15.8% from current levels.

And while shorts are hitting the exits in droves, there’s still a lot of pessimism to unwind, which could propel stocks even higher. Short rates fell 30.2% over the last two reporting periods, but the 4.51 million short stocks sold still account for a significant 12.4% of the stock’s free float.

Shifting the option pits could also create tailwinds for security. This corresponds to BIG Schaeffer’s put / call open interest ratio (SOIR) of 1.34, which is in the upper percentile of its annual range. In other words, short-term option traders were rarely biased.

This seems like an opportune time to get into BIG with options. The equity Schaeffer’s Volatility Scorecard (SVS) is 91 out of 100, suggesting that BIG exceeded volatility expectations over the past year.

LEAVE A REPLY

Please enter your comment!
Please enter your name here