Cybersecurity stocks FireEye Inc (FEYE), Cyberark Software Ltd (CYBR), and Palo Alto Networks Inc (PANW) are enjoying a halo lift
Cybersecurity names are among the biggest gainers this morning, thanks to a solid earnings showing -- and subsequent rush to new highs -- from Fortinet Inc (NASDAQ:FTNT). Among the equities getting a halo lift are FireEye Inc (NASDAQ:FEYE), Cyberark Software Ltd (NASDAQ:CYBR), and Palo Alto Networks Inc (NYSE:PANW).
FEYE has added 6.6% to flirt with $49.71, attempting its first close north of the half-century mark since late June. From a longer-term perspective, FireEye Inc has been crushing it on the charts, boasting a year-to-date gain of nearly 58%. What's more, the stock just bounced off its 80-day moving average -- a bullish signal, per data from Schaeffer's Senior Quantitative Analyst Rocky White.
There have been three previous signals of this kind, and after five days, FEYE has averaged a return of 4.6%, and has been positive 100% of the time. After three weeks following a signal at its 80-day, FEYE has averaged a return of 15.9%, and has been positive 100% of the time, as well.
Today's options crowd is gambling on a move north of $50 by tomorrow's close. Intraday call volume is running at twice the typical rate, with most of the action transpiring at the weekly 7/24 50-strike call. Nearly 2,700 contracts have traded at the call -- more than twice the second-most active -- and much of that volume looks buyer-driven.
The affinity for bullish bets marks a change of pace for FEYE, though. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 0.45 sits in the 75th percentile of its annual range. In other words, option buyers have picked up FEYE puts over calls at a much faster-than-usual clip during the past two weeks. Should FEYE impress in the earnings confessional one week from today, an unwinding of pessimism in the options pits could add fuel to the equity's fire.
CYBR is up 9.2% at $62.76, and attempting to climb atop its 50-day moving average for the first time since late June. This trendline acted as support for CYBR during the first half of the year, but could now act as a speed bump.
Still, option traders today are gambling on more upside for the stock over the next few weeks, which encompasses Cyberark Software Ltd's own turn in the earnings confessional the night of Tuesday, Aug. 11. CYBR calls are trading at twice the average intraday clip, with buy-to-open action detected at the August 75 call -- the most active thus far. In fact, the calls are trading at a volume-weighted average price (VWAP) of $1.12, meaning the buyers will profit if CYBR topples $76.12 (strike plus VWAP) -- a stone's throw from record-high territory -- by the close on Friday, Aug. 21, when front-month options expire.
PANW has advanced 3.5% to sit at $199.13, and just notched an all-time peak of $200.10. As such, speculators today are buying to open the weekly 7/24 200-strike call -- the most popular option thus far -- on hopes for PANW to extend its journey north of the round number through tomorrow's close, when the weekly options expire.
On the flip side, Palo Alto Networks Inc put volume is running at three times the intraday average, with buy-to-open action at the August 195 strike. By purchasing the puts to open, the buyers are either betting on PANW to backpedal beneath the $195 level before front-month expiration, or they're protecting their PANW shares in the event of a pullback.
Whatever the motive, PANW's short-term options can be had at a relative steal. The equity's Schaeffer's Volatility Index (SVI) of 28% sits higher than just 6% of all other readings from the past year, suggesting near-term options are attractively priced right now, from a historical volatility standpoint.