Red-Hot Procter & Gamble Stock Shows No Signs of Slowing

Short-term PG options are relatively cheap at the moment

Consumer products powerhouse Procter & Gamble Co (NYSE:PG) has been driving up the charts since last October. PG has tacked on 46% over the past 12 months, and now sits above its $300 billion market cap. With this foundation in place, now is the perfect time to buy calls.

The security's Schaeffer's Volatility Index (SVI) of 17% ranks in the 21st annual percentile, indicating that short-term options are relatively cheap, from a volatility perspective. In fact, Procter & Gamble stock may benefit from a combination of low volatility expectations and a stock price near 52-week highs. This signal has flashed eight times within the past five years, with 75% of the returns positive for PG a month later.

In the options pits, an unwinding of pessimism could fuel additional upside. This is per the stock's 10-day put/call volume ratio of 2.70 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks in the highest percentile of its annual range.

There is also plenty of room for upgrades and/or price-target hikes. Five analysts still carry a "hold" recommendation, despite PG's breakout price action on the charts in 2019.

Finally, our recommended call option has a leverage ratio of 8.5, and will double in value on an 11% rise in the underlying security.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this PG 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.