Technical Pressure Keeping a Lid on Restaurant Brands Stock

Now looks like a good time to weigh in on QSR with puts

Sep 20, 2023 at 2:46 PM
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Subscribers to Schaeffer's Weekend Trader options recommendation service received this QSR commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

Restaurant Brands International Inc (NYSE:QSR) has been failing near the $70 region, a level of resistance since mid-August, and a line of pressure prior to the stock’s post-earnings breakout in May. Both the stock’s 20- and 200-day moving averages are now keeping a lid on gains, an area that coincides with its year-to-date AVWAP level. With an inverted hammer candlestick formation forming on its recent uptrend, we are betting on the mounting technical resistance to trip up QSR going forward.  

QSR Sep15

The $70 and $72.50 levels are home to large call open interest (OI), with very little put OI below to act as support. QSR’s 50-day call/put volume ratio of 2.85 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks higher than 92% of readings from the past year, leaving plenty of room for a pessimistic shift amongst options traders.
 
Plus, looks like a good time to weigh in on the security's next move with options. The stock is seeing attractively priced premiums at the moment, per its Schaeffer's Volatility Index (SVI) of 16%, which sits in the 7th percentile of its annual range. Furthermore, the security's Schaeffer's Volatility Scorecard (SVS) sits at a relatively high 81 out of 100, meaning QSR has exceeded option traders' volatility expectations during the past year. 
 
Our recommended put option has a leverage ratio of 14.3 and will double on a 6.8% drop in the underlying shares.

 

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