Insurance concern Allstate Corp (NYSE:ALL) recently reported catastrophic numbers that fell below its threshold for August, while increasing rates in 72 locations by more than 10%. Additionally, stocks broke out of the downtrend only to immediately re-enter it, simulating buyers as it rebounded. However, stocks are now back above all major daily, weekly and monthly averages, as well as their 2020 highs, and have pushed back above double their 2020 lows at $128.26.
It’s also worth noting that the price action currently unfolding for Allstate stock is similar to its second major low at the weakly entrenched Covid-19 volume-weighted average price (AVWAP) in 2020, when prices have risen considerably from this level. This means stocks could be poised for another big rally after a period of consolidation. As the stock has also returned above its daily and weekly volume control points (VPOC), we recommend a new long position on ALL.
There is plenty of room for analysts to take a more bullish stance, given that 11 of the 21 companies covered still have a lukewarm “hold” rating or worse. Additionally, a break above the October 130 strike level could produce a tightening scenario, with significant open interest (OI) for calls currently concentrated.
Additionally, Allstate stock has frequently exceeded options traders’ volatility expectations over the past year. That’s according to the stock’s Schaeffer Volatility Scorecard (SVS), which ranks at 81 out of 100. Our recommended call option has a leverage ratio of 6.7 and will double in value on a rise of 15.2% of the underlying stock.