4 Stock Picks to Celebrate 40 Years: Southern Copper

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The stock is ripe for a short squeeze, too

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Mining and metals name Southern Copper Corp (NYSE:SCCO) stock has been moving within a series of lower highs, coupled with a break in SCCO’s recent short-term downtrend. The shares of Southern Copper stock look to have found support near the $50 billion market-cap level and the round +50% year-over-year mark, with an added fluctuation at the year-to-date breakeven level.

In terms of analyst attention, there looks to be ample room for bull notes moving forward on Southern Copper stock. This is per the five of six covering brokerage firms that sport a “hold” or “strong sell” rating on the security.

Meanwhile, in the options pits, bears have been circling SCCO, leaving plenty of room for bulls to enter the ring. Specifically, Southern Copper stock sports a 10-day put/call volume ratio of 2.03 at the ISE/CBOE/PHLX SONO, which stands in the lofty 96th annual percentile. Echoing this put-skewed trading is SCCO’s front-month gamma-weighted Schaeffer’s put/call open interest ratio (SOIR), which sits at a top-heavy 2.59. This means that near-the-money puts outweigh calls among options expiring in the standard August series. What’s more, spikes in the front-month gamma-weighted SOIR have typically pre-dated pops in the price, which could dislodge Southern Copper stock out of its current downtrend.

Short interest on SCCO looks to have rolled over after a climb of 44% between May and June. In fact, Southern Copper’s short interest dropped 13.5% during the past two reporting periods and still accounts for 6.4% of the equity’s float. At Southern Copper stock’s average pace of daily trading, it would take shorts nearly four days to buy back their bearish bets.

Lastly, SCCO’s Schaeffer’s Volatility Scorecard (SVS) rating currently sits at 70 out of 100. This suggests the stock has exceeded these volatility expectations during the past year — a boon for premium buyers.

Subscribers to Bernie Schaeffer’s Chart of the Week received this commentary on Sunday, July 25.