While the real estate market remains not for the faint of heart, the Zillow Group’s (Z) long-term pullback looks like it may be coming to an end. However, before shares begin to make traction in their recovery, history suggests that now is the perfect time for bulls to make bets on Z’s next leg higher.
At last check, Z is trading up 0.3% at $45.37, sporting a week-to-date reading that’s hovering near breakeven. Zillow stock is also trading within one standard deviation of its historically bullish 50-day trendline. Per data from Schaeffer’s Senior Quantitative Analyst Rocky White, Z flashed five similar signals over the last three years, finishing higher each time, averaging a 21.7% one-month gain. A move of similar magnitude would send the security just shy of $55 — its highest mark since early April 2022.
Digging deeper, short-term traders are unusually put-biased, and an unwinding in this bearish sentiment could sent the shares of Z higher. This is per the equity’s Schaeffer’s put/call open interest ratio (SOIR) of 1.34, which stands higher than 99% of readings from the past 12 months.
Lastly, options look affordable, per the stock’s Schaeffer’s Volatility Index (SVI) of 41%, which ranks in the low 7th percentile of Zillow stock’s annual range. In simpler terms, options players have been pricing in low volatility expectations of late.
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