Auto Parts Stock Poised for More Downside

The struggling stock has been the target of short sellers

Auto parts name Aptiv (NYSE:APTV) has been charting a path steadily lower since topping out at a June peak above $103, down almost 40%. The bottom may not be in place yet, though, given the amount of optimism that's currently priced into the underperforming stock.

For starters, 16 of 17 analysts covering APTV maintain a "buy" or better rating, even as the security wallows in annual-low territory. This puts the stock at risk of downgrades, which could exacerbate headwinds on the shares.

Plus, the stock has racked up a 50-day call/put volume ratio of 2.31 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which registers in the 79th annual percentile. This means that calls have been bought to open over puts at a quicker-than-usual clip.

Meanwhile, short sellers have been actively targeting the stock, with short interest more than doubling since the start of the year. More selling by shorts could amplify pressure on APTV.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this APTV commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.