Options look affordable at RIOT too
Riot Blockchain Inc (NASDAQ: RIOT) is on fire this afternoon, equity up 9% to trade at $ 56.79 today, extending its impressive March surge where it added 21.8% for the month. The security is still a long way from its 10-year high of $ 79.50 on February 17, with pressures near the $ 65 mark last month keeping stocks under control. However, there is reason to believe that RIOT could prolong today’s positive price action and make the stock a solid growth decision for April.
According to Schaeffers Senior Quantitative Analyst Rocky White, the crypto stock has pulled back to its 40-day moving average after a prolonged period above the trendline. Similar setbacks to this trendline have occurred five times in the past three years. A month after 75% of these signals, RIOT was higher, averaging an impressive 21-day return of 52.5%. Needless to say, a similar return would take the stock well past its February high, well above the $ 86 mark that RIOT has not hit levels since 2011.
RIOT’s recent rally could also cause shorts to change their mood, and an exodus from these bears could put even more wind on the stock’s back. Short rates rose 24.6% in the last two reporting periods and now account for 59.7% of the available free float of the share capital.
Some of the bear market in the option pits could relax and drive RIOT higher as well. On the Securities Exchange (ISE), the Cboe Options Exchange (CBOE), and the NASDAQ OMX PHLX (PHLX), the Riot Blockchain stock has a put / call volume ratio of 50 days, which is over 74% of last year’s readings .
With that in mind, options look like the right way to go. The Schaeffer’s Volatility Index (SVI) of 123% for the stock is in the 8th percentile of its annual range, which means options traders have rarely priced in lower volatility expectations over the past year. Additionally, RIOT’s Schaeffer Volatility Scorecard (SVS) scores 99 out of a possible 100 points, meaning the stock has tended to beat those expectations over the past 12 months – a good thing for option buyers.