When investors want to get a sense of the overall mood around a stock, they often look to see what's going on in the options market. Just a quick glance at a stock's put/call ratio can actually tell you quite a lot.
The ratio is derived by dividing the number of traded put options, (contracts giving the owner the right to sell a predetermined amount of stock at a specified price within a certain period of time) by call options, which give the holder the right to buy the shares under the same conditions.
When the ratio increases, it means that more investors are betting on a stock's put options than call options, an indicator that the option market's feeling more bearish than bullish about the stock's near-term prospects.
That said, the majority isn't always right -- and an upward, or downward, trend can't last forever. In fact, Put/Call ratios are often used as contrarian indicators when they hit extremes. Some interpret sky-high ratios as a sign to buy, figuring that the market's excessive bearishness will correct when most of the bad news gets priced in.
We put together a list of stocks that have seen significant increases in their put/call ratios, but continue to see insider buying. Which means that while option traders think these stocks are set for more declines, insider execs are feeling a lot more optimistic. Considering that insiders are privy to company intel the rest of us can't access, it could behoove you to pay attention to their trades. (Click here to access free, interactive tools to analyze these ideas.)
|
Company |
Industry |
Put/Call Ratio |
Insider Trends |
|---|---|---|---|
|
Central Pacific Financial Corp. (NYSE: CPF) |
Regional Bank |
3.89 |
Over the last six months, insiders purchased 7,500 shares (insider ownership increased by 42.6%) |
|
Invesco Mortgage Capital (NYSE: IVR) |
Mortgage Investment |
2.68 |
Over the last six months, insiders purchased 15,400 shares (insider ownership increased by 6.%) |
|
Teleflex Incorporated (NYSE: TFX) |
Medical Instruments & Supplies |
2.04 |
Over the last six months, insiders purchased 5,000 shares (insider ownership increased by 1.9%) |
|
The Dolan Company (NYSE: DM) |
Publishing |
2.81 |
Over the last six months, insiders purchased 4,000 shares (insider ownership increased by 0.2%) |
|
Federated Investors (NYSE: FII) |
Asset Management |
6.58 |
Over the last six months, insiders purchased 7,750 shares (insider ownership increased by 0.1%) |
Options data sourced from Schaeffer's, insider trading data sourced from Yahoo! Finance. The list has been sorted by the change in shares held by insider executives over the last six months.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.
Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.
