Utility Stock Overdue for Bear Notes

There's optimism to be unwound in the options pits, too

It has been a rocky road for Exelon Corporation (NASDAQ:EXC) is recent weeks, with the utility services specialist falling victim to the broader market's steep slide. In fact, at the end of last month, the stock hit its lowest level since late-2018, and is now struggling to conquer its year-to-date breakeven, which it closed south of on Friday. What's more, in the past 12 months, EXC has lost nearly 7%.

Despite this, analysts are surprisingly bullish. Fourteen of the 18 in coverage consider the equity a "buy" or better, with not a single "sell" rating on the books. Plus, the consensus 12-month price target of $55.27 is a solid 22% premium to current levels.

This optimism can be seen in the options pits, too, which could lead to even more headwinds, should some of these bulls begin to jump ship. This is per EXC's 50-day call/put volume ratio of 5.33 at the the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 74th percentile of its annual range.

While short interest has surged 27% in the last reporting period, there's still plenty of room on the bearish bandwagon. The 15.24 million shares sold short represent a measly 1.6% of the stock's available float, or less than three days' worth of coverage at its average daily pace of trading.

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