Energy stock Marathon Petroleum Corp. (MPC) was just recently trading at a new all-time high, observes Jake Scott, technical expert and deputy editor at Schaeffer Investment Research.
Over the last 12 months, MPC added 88.6% and already stands more than 15% higher in 2023. Bullish traders shouldn't let their foot off the gas, though, as the stock flashes a historically bullish signal. The stock's highs come amid historically low implied volatility (IV) — a bullish combination in the past.
Per data from Schaeffer's Senior Quantitative Analyst Rocky White, there have been four similar times during the past three years, when the equity was within 2% of a 52-week high while its Schaeffer's Volatility Index (SVI) sat in the 20th annual percentile or lower. MPC's SVI of 34% that stands higher than just 14% of readings from the past year.
The stock averaged a 5.5% return after 67% of those signals. What's more, the equity's Schaeffer's Volatility Scorecard (SVS) sits at an elevated 80 out of a possible 100. This implies the equity has exceeded option traders' volatility expectations during the past year.
An unwinding of pessimism in the options pits could also fuel tailwinds. The stock's 50-day put/call volume ratio of 0.96 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 96% of annual readings.
So while calls still outpace puts on an overall basis, the appetite for bearish bets has rarely been healthier over the last 12 months.