Centene shares hit a record high of $94.58 after yesterday’s gains. This spike comes amid historically low implied volatility (IV), which has been a bullish combination for the stock in the past. According to data from Schaeffer’s Senior Quantitative Analyst Rocky White, there have been four other instances in the past five years where the stock traded within 2% of its 52-week high, while Schaeffer’s Volatility Index (SVI) was in the 20th percentile or below. — as is the case with CNC’s current SVI of 29%, which is in the 19th percentile of its 12-month range.
The data shows that the health care stock was three times out of four a month later, with an average return of 2.3%. From its current position at $91.94, a similar-sized move would push CNC back to its record highs. Security is up 30.5% year-over-year, with long-term support at the $75 level.
A decline in pessimism in the options pits could also boost the stock. On the International Securities Exchange (ISE), Cboe Options Exchange (CBOE) and NASDAQ OMX PHLX (PHLX), Centene’s 50-day put/call volume ratio of 1.92 is above 94% of the readings of the last year, what the put- to be retrieved much faster than usual.