ZM short sellers can't be happy with today's breakout
Schaeffer's Senior Options Strategist Tony Venosa, CMT is taking a look at the shares of Zoom Video Communications Inc (NASDAQ:ZM) ahead of the company's earnings release next Wednesday, March 4. Venosa pointed out that ZM stock recently moved past the 50% year-to-date level, and is now testing a region on the charts near $36 that is equal to three times the company's initial public offer (IPO).
Of course, Zoom Video Communications has also rallied past the potentially significant $100 mark, and today is trading up 5% at $106.82. This price action is notable, since many are speculating it's due to coronavirus tailwinds. In short, the thinking is that the virus' outbreak could mean a bigger need for teleconference technology like ZM provides. (Click on the chart below for a larger view.)
In the options pits, the weekly 2/28 115-strike call was home to notable open interest coming today, with data confirming mostly buy-to-open activity here. As such, traders were betting that ZM will rise beyond $115 by the end of the week, when the contracts expire. This contract is actually seeing accelerated action in today's trading, as it appears some of these bulls could be closing their positions.
Many traders are betting against ZM, though, with short interest accounting for almost 26% of the float. In just the last two reporting periods, short interest increased by 15.5%.