Did Social Media Chatter Predict the Move in Frontline?

This week, Social Market Analytics looks at Frontline FRO, the world's biggest operator of oil supertankers and dry cargo transport carriers.

Shares in Frontline's stock rallied sharply on March 16 in reaction to reports that demand for oil tankers is rebounding and that shipments of oil to China have increased dramatically. Frontline also had notable call option activity during the week, which makes it an excellent case study showing how SMA's S-Factor metrics can provide early indication of stock price movement and equity option market activity.

On March 14, SMA's S-Score and S-Volume metrics for Frontline began an upward trend. Frontline's stock price closed flat for the day, but volume in the April $6.00 calls increased dramatically seeing a strong increase from the level on March 13.

Then, on March 15, option activity accelerated as the April $6.00 call traded a volume of 1171 contracts, coincident with an accelerating S-Score from Neutral to Positive levels. Frontline's stock price closed the day at $6.18, an increase of 12.6%. On March 16, Frontline's pre-open S-Score moved sharply up to 3.97 (High Positive) with a spike in S-Volume.

Option activity continued at a volume unusual for Frontline with the April $6.00 call trading 1515 contracts and call volume across all strikes outpacing put volume by 12 to 1. Frontline's stock ended the March 16 session at $7.65, an increase of 23.79% for the day, up 39.3% from March 14 and up 46.6% for the week. The April $6.00 call closed the week at a mid-price of $1.85, up 825% from the close on March 14.

Social Media data are noisy and complex. A single metric is insufficient to understand sentiment behavior over time. Our S-Factors are a family of metrics, including volatility, trend and volume measures, designed to provide a complete view of the Social Media signature for each security tracked in SMA's database.

SMA's processing engine continuously updates our S-Factor metrics, capturing overnight and pre-market sentiment activities. Clients receive sentiment reports prior to the US market open and on-demand throughout the day. We invite the reader to visit our website; investigate our market sentiment measures for FRO, other stocks, industry sectors, and broad market indices; and participate in our FAQ forum.