Sector Follows FireEye Inc (FEYE) South on Bearish Note

Cybersecurity stock FireEye Inc (NASDAQ:FEYE) is bucking the broad-market trend higher in a big way, and taking peer Cyberark Software Ltd (NASDAQ:CYBR) with it. In fact, FEYE was last seen down 7.8% at $27.07 -- after hitting an annual low of $26.73 -- on the heels of a Wedbush downgrade to "neutral" and price-target cut to $32. Explaining its rationale, the brokerage cited growing competition from Palo Alto Networks Inc (NYSE:PANW).

Not everyone's mourning FEYE's blood-letting, though. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have been placing bearish bets at a faster-than-usual pace in recent months. Specifically, the stock's 50-day put/call volume ratio of 0.63 ranks just 11 percentage points from a 12-month high. As a result, FEYE's Schaeffer's put/call open interest ratio (SOIR) of 0.94 registers above 90% of comparable readings from the past year, hinting at a pronounced preference for short-term puts over calls.

Likewise, short sellers may be capitalizing on the sell-off. Over 20 million FEYE shares are sold short, or over 14% of its outstanding float. 

As alluded to, CYBR is following in the bearish footsteps of FireEye Inc, down 3.3% at $45.79. On a year-to-date basis, though, the former -- helped by recent buyout speculation -- is still sitting on a gain of 15.5%, as well as historical support in the $45 area.

Last-minute speculators are counting on a bounce for the stock by today's close. Cyberark Software Ltd's most active option is the weekly 10/23 48-strike call, with likely buy-to-open activity transpiring. In other words, buyers believe CYBR will topple the out-of-the-money strike by the closing bell, when the weekly series expires.