Zscaler boasts a 214% year to date lead, and its most recent pullback looks intriguing
Software giant Zscaler Inc (NASDAQ:ZS) has far from struggled over the long term. From a technical view, the equity boasts a 214% year-to-date lead, and is now trading at more than nine times its initial public offering (IPO) price of $16. However, the shares have recently pulled back, making now an opportune time to buy calls.
Meanwhile, shorts look to be in covering mode on the equity. Specifically, short interest fell 4.5% during the last two reporting periods, and now accounts for more than 10% of the stock’s total available float. Even further, there looks to be room for upgrades, with seven covering brokerages firms sporting a tepid "hold."
Turning toward options, this bearish sentiment is echoed. This is per ZS’ Schaeffer's put/call open interest ratio (SOIR) of 1.09, which stands higher 64% of readings from the past year. In other words, short-term option traders have rarely been more put-biased.
Lastly, now looks like an affordable time bet on Zscaler stock with options. This is per the stock's Schaeffer's Volatility Index (SVI) of 48%, which sits higher than just 10% of all other annual readings. What’s more, ZS’ Schaeffer's Volatility Scorecard (SVS) ranks at a high 78 out of 100, meaning the security has tended to exceed these expectations during the past year -- a boon for premium buyers. Our recommended call has a leverage ratio of 4.9 and will double in value on a 21.1% rise in the underlying equity.
Subscribers to Schaeffer's Weekend Trader options recommendation service received this ZS commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.