Backtesting New 52-Week Highs With Bullish Options Sentiment

All of the stocks mentioned below are trading close to their 52-week high and experienced unusually high trading volume during Friday's session. Additionally, all these names have a large number of open call option positions relative to put option positions, i.e. a low Put/Call ratio.

For each stock we'll list the Relative Volume indicator, which expresses Friday's trading volume as a multiple of the three-month average.

Options traders seem to think these names are set for more near-term gains. To dig deeper, we did some backtesting to see how these stocks have performed near 52-week highs over the last five years. (To access historical data on the backtesting, click here)

Options data sourced from Schaeffer's, short float and performance data sourced from Finviz. (Note: Options data sourced on Friday afternoon)

Interactive Chart: Compare the performance of IHS, CELL and BZ

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Backtested Strategy: Buy 100 shares of the stock on a 52-week high if relative volume is greater than 2. Exit if the position gains 10%, or if 30 days have passed since the initial entry. Also include a 5% trailing stop loss.

1. IHS Inc. (IHS): Business Software & Services Industry. Market cap of $5.3B.

Relative volume at 3.17. Call open interest at 429 contracts vs. put open interest at 193 contracts (Put/Call ratio at 0.45). Short float at 1.88%, which implies a short ratio of 4.31 days. The stock has gained 62% over the last year.

Backtested Results: Over the last 5 years, the 52-week high alert was triggered 4 times. Trading the above-mentioned strategy resulted in 3 winners and 1 loser (75% success rate). The strategy returned 17.48%, lower than the buy and hold return of 237.12%.

2. Brightpoint Inc. (CELL): Electronics Wholesale Industry. Market cap of $855.81M.

Relative volume at 2.3. Call open interest at 500 contracts vs. put open interest at 242 contracts (Put/Call ratio at 0.48). Short float at 2.75%, which implies a short ratio of 3.12 days. The stock has gained 82.07% over the last year.

Backtested Results: Over the last 5 years, the 52-week high alert was triggered 5 times. Trading the above-mentioned strategy resulted in 3 winners and 2 losers (60% success rate). The strategy returned 5.17%, higher than the buy and hold return of -20.88%.

3. Boise Inc. (BZ): Paper & Paper Products Industry. Market cap of $754.36M.

Relative volume at 2.92. Call open interest at 27,327 contracts vs. put open interest at 11,261 contracts (Put/Call ratio at 0.41). Short float at 21.61%, which implies a short ratio of 8.82 days. The stock has gained 83.88% over the last year.

Backtested Results: Over the last 5 years, the 52-week high alert was triggered 10 times. Trading the above-mentioned strategy resulted in 5 winners and 5 losers (50% success rate). The strategy returned 2.77%, in line with the buy and hold return of 2.82%.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.