Put Traders Should Take a Flier on Schlumberger Stock

Schlumberger NV (NYSE:SLB) stock has been climbing since mid-August, now up 1.9% to trade at $35.97 as it heads for its seventh daily win in eight sessions. A look at the oil name's stock chart, however, shows plenty of overhead resistance and the shares trapped in a channel between $32 and $36. In simpler terms, now is a perfect time to bet on a short-term drop. 

The recent price action has SLB running into pressure at the $36 level, which has put pressure on the shares since early April. Plus, the stock has come into contact with its 128-day moving average. More specifically, the stock is within 0.75 of the 128-day trendline's 20-day average true range (ATR), after spending at least 80% of the last 10 days and 80% of the last two months above it.

According to Schaeffer's Senior Quantitative Analyst Rocky White, this has occurred four other times in the past three years, after which the equity was lower one month later every time with an average 8.2% loss. A move of similar magnitude from the stock's current perch would put SLB back at $33, keeping trapped in its current channel.

Plus, short interest is down 43.8% in the last two weeks. This uses up most of the stock's short covering potential, accounting for 2.4% of the stock's available float.

When weighing in on SLB, options look like an affordable way to go. The equity's Schaeffer's Volatility Scorecard (SVI) of 31% ranks in the low 11th percentile of its annual range, meaning options traders are pricing in low volatility expectations.