Now may not be the time to buy the dip on ZM
Zoom Video Communications Inc (NASDAQ:ZM) stock is up 1.2% at $61.99 at last glance, rebounding from yesterday's multi-month lows. The equity sits below all notable and short- and long-term moving averages, including its 20-day trendline, and is down 8.6% since the start of the year.
Options traders were aggressively bullish over the last two weeks, and an unwinding of this optimism could provide headwinds. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ZM's 10-day call/put volume ratio of 3.88 ranks higher than 96% of readings from the past year.
Plus, Zoom Video stock's most recent dip comes amid historically low implied volatility (IV), as its Schaeffer's Volatility Index (SVI) of 39% ranks in the low 14th percentile of its annual range. According to Schaeffer's Senior Quantitative Analyst Rocky White, there were four other signals in the past five years where ZM was trading within 5% of its 52-week low, while its Schaeffer's Volatility Index (SVI) sat in the 40th percentile of its annual range or lower. The equity was negative one month later after half of those signals, averaging a minor loss.
It's also worth pointing out that ZM ranks low on the Schaeffer's Volatility Scorecard (SVS), with a score of just 1 out of 100. In other words, the security has consistently realized lower volatility than its options have priced in, making the stock a potential premium-selling candidate.