Rallying within the range

  • Ryder System (R) up more than 10% over the past five days
  • Call options volume heavy, but traders may have trimmed positions
  • Stock move remained within longer-term trading range

Whether you’re a trader or a long-term investor, it never hurts to consult different time frames.

On Monday, trucking and logistics company Ryder System (R) had higher-than-average call options volume—at least 1,200 November $85 calls and 1,300 November $90 calls traded by midday. But with open interest (OI) in both contracts in excess of 30,000, it was unclear whether traders were lightening their exposure or adding to positions.

The following price chart may provide some context for the activity in the stock and its options—on a longer-term as well as shorter-term basis:

Chart 1: Ryder System (R), 3/16/20–10/27/22 (weekly). Rallied toward top of 17-month range

Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)

The daily chart inset (September 26 forward) shows Ryder jumped to a multi-week high after releasing earnings last Wednesday, pushed slightly higher on Thursday, then began to pull back. Although it was the seventh-straight quarter Ryder beat its headline earnings estimate,1 the weekly chart shows last week’s jump simply returned the stock to the upper portion of a trading range dating back to May 2021.

That’s not to say a stock in this position couldn’t extend its gains, but for some traders, it may raise a basic question: With one bullish catalyst (earnings) already in the rear-view mirror, what may be different about the most recent rally than the four or five others that stalled between roughly $83 and $93?

A trader may very well have an answer to that question, but the absence of one may lead some to view short-term stock momentum and unusual call activity with a cautious eye.

November market profile. November is widely known as one of the most bullish months of the year, but many people may not be aware that reputation was mostly built over the past 30 years. From 1962–1991, the SPX’s November performance was middle of the road—up 17 times vs. down 13 times. Since then, though, November has been positive in 22 out of 30 years, including 15 of the past 20, and nine of the past 10:

Chart 2: S&P 500 (SPX) November monthly returns, 1992–2021. November up 22 of past 30 years.

Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)

Since 1992, November also has the largest median return of any month (2.3%).

Market Mover Update: Steel Dynamics (STLD) pulled back for a third day since testing its former all-time high (see “Bearish call trading?”). With earnings due tomorrow, Workiva (WK) started the week with a small loss (see “Options at work”).

The stock market may have dipped on Monday, but that didn’t prevent the SPX from logging its second-best month since November 2020, and its best October since 2015.

Today’s numbers include (all times ET): S&P Global PMI Manufacturing (9:45 a.m.), ISM Manufacturing Index (10 a.m.), Construction Spending (10 a.m.), Job Openings and Labor Turnover Survey (10 a.m.), FOMC meeting starts.

Today’s earnings include: BP (BP), LGI Homes (LGIH), Eli Lilly (LLY), Pfizer (PFE), Phillips 66 (PSX), Uber (UBER), Airbnb (ABNB), Advanced Micro Devices (AMD), Clorox (CLX), Livent (LTHM).


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1 StreetInsider.com. Ryder System (R) Earnings. 10/31/22.

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