Box Stock's Recent Breakout Could Have Legs

A shift in sentiment could also provide tailwinds

Aug 2, 2022 at 9:37 AM

Cloud concern Box Inc (NYSE:BOX) recently broke above its 80- and 100-day moving averages, before retesting and bouncing off this level mid-week. In addition, the security just closed above a level that's double its initial public offering price (IPO) -- an area that stalled prices in June and July -- and found support at its 2018 and 2021 monthly closing highs, as well as its year-to-date breakeven level. With this impressive technical setup, now looks like an ideal time to speculate on BOX with calls.

A shift in the options pits could provide additional tailwinds. Specifically, at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Box stock sports a 50-day put/call volume ratio of 1, which sits higher than all other readings from the past 12 months. This implies that puts have never been more popular during this time period.

Meanwhile, the brokerage bunch leans optimistic, but there's still room for upgrades for the outperforming equity. Currently, four analysts still rate BOX a tepid "hold" against six "buy" or better recommendations.

The good news is the security sports relatively cheap options at the moment. This is per Box stock's low Schaeffer's Volatility Index (SVI) of 35%, which ranks higher than just 14% of readings from the past 12 months. Our recommended call has a leverage ratio of 4.81 and will double on a 21.9% pop in the underlying shares.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this BOX 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.

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