Joseph Hargett (jhargett@sir-inc.com) Shares of French oil giant Total SA (TOT) surged higher on Thursday last week, after the company announced a joint venture with China Power Investment Corporation (CPI) to build a coal-based petrochemical plant in China. However, the equity was stopped cold at the $58 level - an area that has a history of providing both technical support and resistance for TOT. The stock has since moderated, finding support in the $55.50 region. In fact, the equity appears poised to rebound from this region this morning.
On the options front, traders snatched up calls at a rapid pace yesterday, with volume surging to more than 200 times TOT's daily average. What's more, practically all of this volume - 99.6% according to WhatsTrading.com - traded on the call side. A closer look at TOT reveals that the stock goes ex-dividend today, meaning that most of yesterday's volume was probably associated with a dividend capture strategy. In fact, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.60 arrives higher than 96% of all those taken in the past year, pointing toward an overriding level of pessimism among options traders.
This negativity has spilled over into the stock's analyst backdrop, as Zacks reports that four of the seven brokerage firms following TOT rate the shares a "hold." If the stock can continue its recent technical strength, rallying more than 19% off its August low near $46.26, it could shake some of these bearish holdouts from their positions.
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