On-call traders should add this chemical specialist to their portfolio

CF options seem affordable at the moment

The actions of CF Industries Holdings, Inc. (NYSE:CF) – up 45% year-on-year – retreated after hitting all-time highs in late December. This correction put the CF at the $63.50 level, triple its 2020 closing low, and close to the 80-day moving average – a trendline that has supported breakouts in the past. Additionally, the $70 area is remarkable given its correspondence to CF’s $15 billion market capitalization. With these solid technical foundations in place, now is the perfect time to speculate with calls.

A relaxation of pessimism could put wind at the back of equities. This is the open interest ratio (SOIR) put/call for CF Industries Schaeffer stock, which is above 93% of last year’s readings. In other words, short-term options traders had a bigger appetite than usual for put options.

A further shift in sentiment from the brokerage group could also have bullish implications for CF, as five out of 11 hedges still rate the stock as a lukewarm “hold”. In addition, short-term interest has increased by 50.7% over the past month.

The good news is that the options are affordable right now. That’s CF Industries’ Schaeffer Volatility Index (SVI) of 38%, which is in the relatively low 25th percentile of its annual range, meaning options traders’ volatility expectations are frosty. for the moment. Additionally, the stock’s Schaeffer’s Volatility Scorecard (SVS) sits at 85 out of 100, suggesting that the stock has exceeded options traders’ volatility expectations over the past year.

Our recommended call option has a leverage ratio of 5.0 and will double with a 19.8% increase in the underlying stock.

Subscribers to Schaeffer’s Weekend Trader options recommendation service received this commentary from the CF on Sunday evening, along with a detailed options trading recommendation, including full entry and exit parameters. Learn more about why weekend trader is one of our most popular options trading services.

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