Support In Place For Redfin Stock To Swim Higher

The shares of Redfin Corporation (RDFN) are up 4.4% at $45.57 at last check, a chip-shot away from the stock’s August 7 record highs. With close support at the 10-day moving average, more upside might be on the way. This recent peak comes amid historically low implied volatility (IV), which has been a bullish combination for Redfin stock in the past.

According to data from Schaeffer’s Senior Quantitative Analyst Rocky White, there have been two other times in the past five years when the stock was trading within 2% of its 52-week high, while its Schaeffer’s Volatility Index (SVI) sat in the 20th percentile of its annual range or lower. This time around, RDFN’s current SVI of 65% sits in the 17th percentile of its 12-month range. The data shows that one month after this signal, the security was higher both times, averaging a one-month return of 29.6%. From its current perch, a move of similar magnitude would put RDFN up at the $59 mark, an area never seen before and over five times the stock’s 2020 lows.

On the analyst front, 10 out of the 17 in coverage carry a “hold” or worse rating, while the remaining seven sport a “strong buy.” Meanwhile, though short interest has begun to fall, the 8.15 million shares sold short still account for 9% of the stock’s available float – or over five days worth of pent-up buying power.

Lastly, it is worth noting that nearly 10 times as many calls have been bought for puts in the last 10 days. This is per Redfin stock’s 10-day call/put volume ratio of 9.95 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 88th percentile of its annual range. This suggests a heavier penchant for calls than usual as of late.

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