QSR has several layers of technical pressure on the charts
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Restaurant Brands International Inc (NYSE:QSR) has been failing near the $70 region, a level of resistance since mid-August, and a line of pressure prior to the stock’s post-earnings breakout in May. Both the stock’s 20- and 200-day moving averages are now keeping a lid on gains, an area that coincides with its year-to-date AVWAP level. With an inverted hammer candlestick formation forming on its recent uptrend, we are betting on the mounting technical resistance to trip up QSR going forward.
The $70 and $72.50 levels are home to large call open interest (OI), with very little put OI below to act as support. QSR’s 50-day call/put volume ratio of 2.85 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks higher than 92% of readings from the past year, leaving plenty of room for a pessimistic shift amongst options traders.
Plus, looks like a good time to weigh in on the security’s next move with options. The stock is seeing attractively priced premiums at the moment, per its Schaeffer’s Volatility Index (SVI) of 16%, which sits in the 7th percentile of its annual range. Furthermore, the security’s Schaeffer’s Volatility Scorecard (SVS) sits at a relatively high 81 out of 100, meaning QSR has exceeded option traders’ volatility expectations during the past year.
Our recommended put option has a leverage ratio of 14.3 and will double on a 6.8% drop in the underlying shares.