Options are affordably priced as well
Pivotal initiated coverage of Alphabet Inc (NASDAQ:GOOGL) with a “buy” rating, noting the Google parent’s “attractive valuation in any realistic scenario.” GOOGL was last seen trading near breakeven at $165.97.
The shares pulled back after hitting a July 10, record high of $191.75 to their lowest level since March, but have since bounced to conquer their 40-day moving average. While the $168 region has been acting as a ceiling since late August, GOOGL sports a 20.3% year-to-date lead.
Calls have been much more popular than usual. This is per GOOGL’s 10-day call/put volume ratio of 3.10 over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks higher than 93% of readings from the past year.
Drilling down to today’s options activity, 62,000 calls and 24,000 puts have already traded hands, which is triple the volume typically seen at this point. The most popular contract by far is the weekly 10/4 170-strike call, with new positions currently being opened there.
Options are attractively priced. This is per Alphabet stock’s Schaeffer’s Volatility Index (SVI) of 24% that ranks in the relatively low 20th percentile of its annual range, meaning options traders are pricing in low volatility expectations at the moment.