Cyberattack Sets the Stage for Cyberark Software Ltd, FireEye Inc Earnings

Cybersecurity specialists Cyberark Software Ltd (NASDAQ:CYBR) and FireEye Inc (NASDAQ:FEYE) will report earnings tomorrow night

Alex Eppstein
May 4, 2016 at 11:56 AM
facebook twitter linkedin


This morning, Reuters reported that countless email accounts have been hacked at home and abroad -- including users of Alphabet Inc's (NASDAQ:GOOGL) Gmail and Yahoo! Inc.'s (NASDAQ:YHOO) email service. Among the victims of the cyberattack were employees of major U.S. financial, manufacturing, and retail firms. Given the breach, it's only appropriate that a pair of cybersecurity specialists are headed to the earnings confessional tomorrow night -- specifically, Cyberark Software Ltd (NASDAQ:CYBR) and FireEye Inc (NASDAQ:FEYE).

Starting with CYBR, the stock is failing to benefit from the email hack, down 3.4% at $41.14. Still, shares of the cybersecurity firm have come a long way since their early February low of $31.50, advancing over 30.6%. It's also a good sign that the stock has seemingly found a foothold at its 50-day moving average, which has reliably supported CYBR since mid-April.

As mentioned earlier, Cyberark Software Ltd is scheduled to report earnings tomorrow night. Historically, the stock has made major swings in the immediate aftermath of the past six reports, moving 11.1% on average, in either direction. Ahead of earnings, options traders have been placing upside bets on the long-term technical outperformer. Specifically, CYBR's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 11.20 ranks 2 percentage points from a 12-month peak.

Shifting gears, FEYE has dropped 1.7% to trade at $16.39. Longer term, the cybersecurity stock has been consolidating in the $16-$19 range since early March. That could all change with tomorrow night's earnings report. Looking back eight quarters, FEYE has moved an average of 12.3% in the session following the event -- with six of eight resolving to the downside.

Expectations are high ahead of FireEye Inc earnings. The stock's 10-day ISE/CBOE/PHLX call/put volume ratio checks in at 9.07, outstripping 94% of comparable readings taken in the last year. Should FEYE disappoint Wall Street tomorrow night, a capitulation among bullish options traders could exacerbate a sell-off. Also, now appears to be a good time to wager on short-term options, as the cybersecurity stock's Schaeffer's Volatility Scorecard (SVS) registers at a high 76, indicating FEYE has tended to make outsized moves in the past 12 months, relative to what the options market has priced in.

A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earnings guide for Q3 before it's too late!


  
 

Partnercenter