Weekend Trader Alert
March 31, 2024
Open Positions Update
There are no portfolio updates this week.The following is this week's recommendation:
Blackstone (BX)Place a limit order to buy the Blackstone (BX) June 21, 2024 125-strike call at a limit price within range of the current market asked price when you place your order. At the close on Thursday, March 28, this option was offered at $13.20. BX closed at $131.37 on Thursday, March 28.Do not attempt to enter this position after Monday's close.Please use the following guidelines to manage the position:- Exit the position if the option is at a 100% gain from your entry price.
- If the option has not reached its target profit by 3:00 p.m. Eastern time on Monday, April 22, close the position.
- If there is a change to the above closeout parameters, we will notify you in your regular Sunday evening communication.
Private equity name Blackstone (BX) just broke above its year-to-date breakeven level, with a confluence of moving averages in support, including its 20-, 50- and 80-day trendlines. The stock held its 61.8% Fibonacci retracement level from its Nov. 2021 highs and Dec. 2022 lows, and could be making a push for a 100% retracement.
A pullback to the 120-strike, home to significant put open interest (OI), helped give the stock a boost, pushing it above the next large put OI level – the 125-strike. This gives Blackstone stock potential to run over overhead call strikes.
Furthermore, BX’s 50-day put/call volume ratio of 2.34 at the International Securities Exchange (ISE), Cboe Volatility Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 75th percentile of its annual range. The equity trends to have bullish returns when the ratio is this lopsided, and an unwinding of pessimism could provide tailwinds.
Premium traders looking to speculate can do so now for a bargain, per BX's Schaeffer's Volatility Index (SVI) of 32%, which ranks in the low 22nd percentile of readings from the past 12 months. This implies these traders are pricing in low volatility expectations.
Our June 125 call has a leverage ratio of 6.57, and will double in a 15.3% rise in the underlying shares.
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