Go Camping with Yeti

07/01/2020 5:00 am EST


Bernie Schaeffer

Chairman and CEO, Schaeffer's Investment Research

As people across the globe continue to socially distance in the wake of COVID-19, a renewed interest in camping as an outdoor activity could mean Yeti Holdings (YETI) still has plenty of room to grow, suggests Bernie Schaeffer, editor of the Option Advisor.

The equity has been on a steady rise since early April, reaching an all-time-high of $44.60 on June 23, slicing through double its IPO price at the $36 level along the way.

Regardless, analysts’ revisions have not moved higher even as the stock soared. And among short sellers, the 9.4 million shares sold represent more than 12% of YETI’s available float.

As more bears start to hit the exits — short interest fell by 5.8% in the two most recent reporting periods – an unwinding of these bets could push YETI higher.

In the options pits, YETI’s Schaeffer's open interest ratio of 1.37 sits high in the 73rd percentile of readings from the past 12 months, suggesting options players have rarely been more put-biased as of late. Meanwhile, the stock's SVI of 65% stands higher than just 28% of all other annual readings.

This means that options players are currently pricing in relatively low volatility expectations for YETI, a boon for premium buyers. For options traders, we recommend buying the November 20, 2020 call with a strike price of $40.

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