By: Tom Gentile
on November 19th, 2021
Cheap IV list
The morning report list I am looking at is the Cheap IV list. These are stocks whose options aren’t overpriced. They tend to happen on stocks post their earnings announcement or stocks that don’t have a pending event happening soon that could affect wild speculation on what it will do good or bad.
I don’t have to worry about a volatility crush dropping the price of the option regardless of the stock price movement.
Add Technical Analysis to Your Research
I Look Deeper into the technical view of the stock on this list in the event I see an intriguing pattern that makes for a reason to consider an options trade. Some of these may not have an intriguing technical pattern on it, but if one does I tend to favor that one.
First, here is the chart view of the stock at the top of the list, Occidental Petroleum Corporation (NYSE: OXY).
You can see the candlestick Chart with a solid black line which represents the 7-149 day At the Money (ATM) Implied Volatility.
Fibonacci Retracement Tool
What I did with all these is look at a Fibonacci retracement view from my tools at www.tomsoptiontools.com and I like the fact this stock is at a potential support at the 38.2% Fib retracement level.
This is a potential support that may call an end to the pullback off its recent high at 35.36.
What I like about Fib retracement levels is it could act as a support (or resistance on a down trending security) at either of the level shown by the Fib tool placed on the chart.
I recognize 50 isn’t a number in the Fibonacci sequence, but it is a popular percentage level used by many technical chartists as either support or resistance that may software programs like mine has it added into the Fib tool view.
I would at this point start digging into the options chain to look at various bullish options strategies and see which ones have the best or most ideal ROI potential to trade.