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 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.