Look for a dip below $31 as an aggressive entry point, and closer to $30 for the conservative play. Selling $30 strike price February Put options for about $1.30 is another entry method.
If your options are exercised and the shares are put to you, your cost basis is only $28.70 a share. That's an effective yield of 5.3% from future dividends, and if Seagate remains above $30 and the options expire worthless, your gain is about 4.3% for six weeks.
For a company analysts are mostly rating a hold, the stock really appreciated, gaining 76% in the last year, and the average analyst target price for Seagate is $29.59. Expect analyst target price upgrades soon at the rate the stock is trending. An analyst upgrade will often become self-fulfilling from the greater stock awareness and gained enthusiasm.
The short interest is markedly elevated and should be treated as a red flag that short sellers expect the price to fall. The current float short is 14.1%. It's increasingly becoming unprofitable for the shorts to hold their positions. While I don't normally like to bet against the shorts, I believe they have it wrong this time. STX Payout Ratio TTM data by YCharts
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