The shares of KeyCorp (NYSE:KEY) recently broke above $21, a level that has acted as resistance since mid-June. In addition, the security is sitting just above its $20 billion market cap level and announced a share repurchase program in early September. With all these technical factors in place, now looks like the perfect time to purchase KEY calls.
Despite KEY’s outperformance on the charts, analysts remain on the sidelines. Of the 14 in coverage, 9 maintain a “hold” or “sell” rating. Meanwhile, the shares are cling in on KEY’s consensus 12-month price target of $22.79. This indicates a round of upgrades and/or price-target hikes could be in store, which would in turn push KEY higher.
There’s pessimism left to unwind in the options pits, too, per KEY’s 20-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits in the 96th percentile of its annual range, meaning puts are being picked up a relatively quicker-than-usual clip.
The good news for those looking to speculate with options, is they can be had for a bargain. KeyCorp stock’s Schaeffer’s Volatility Index (SVI) of 32% sits below all but 26% of annual readings, implying options traders are pricing in relatively low volatility expectations for the equity at the moment. Our recommended January call has a leverage ratio of 5.9 and will double on a 15.9% pop in the underlying shares.