Oversold Stock of the Day: CBOE Global Markets (CBOE)
With the explosion in stock trading this year, and an even bigger growth in the options space, it should be a banner year for the CBOE Global Markets (CBOE). But it isn’t. Shares aren’t just down; they’re oversold.
In fact, despite a 40 percent jump in revenue, shares are down 30 percent over the past year. And the selloff has gotten so bad that the stock’s relative strength index has just dropped under 30.
Granted, the company has been buying up some smaller players in the space in the past few months. That can weigh on the share price. But that also eliminates smaller competitors and allows it to increase market share, making for an attractive holding. The company also just raised its annual dividend
Action to take: Eventually, the company’s improving fundamentals will reverse the slide in shares, and traders should be able to get at least some bounce in the next few months to grab quick profits.
With shares oversold, they look due for a bounce. The March 2021 $85 calls trade for about $4.00, and should deliver mid-to-high double-digit returns as shares start to pull higher.
Investors may also like shares in the low-$80 range, given the company’s positioning in an oligopoly industry, and its history of dividend growth.