This Bank Stock Looks Poised for a Relief Rally

 

 

Options traders have been much more bearish than usual, per the security's 10-day put/call volume ratio of 2.39 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) that sits in the 90th percentile of its annual range. An unwinding of this pessimism could create additional tailwinds for PNC.

Options are affordably priced, per the stock's Schaeffer's Volatility Index (SVI) of 35% that stands in the 29th percentile of annual readings. Plus, PNC's Schaeffer's Volatility Scorecard (SVS) comes in at 97 out of 100. In other words, shares have consistently realized higher volatility than its options have priced in over the past 12 months.

 

Our recommended May call has a leverage ratio of 9.7 and will double on an 11% rise in the underlying equity.