Schaeffer's Top Stock Picks for '25

What CyberArk Options Are Telling Us Ahead of Earnings

Short sellers have more than doubled their bets against the cybersecurity stock in recent weeks

Feb 14, 2018 at 11:40 AM
facebook X logo linkedin


Ahead of the opening bell this Thursday, Feb. 15, Israel-based CyberArk Software Ltd (NASDAQ:CYBR) is slated to report its fourth-quarter earnings. Options traders are banking on CYBR to make a massive move on the charts in the wake of its quarterly results -- currently, the equity's options are pricing in a 13.8% post-report move, according to Trade-Alert, nearly doubling CYBR's average one-day post-earnings price swing of 7.1% over the past eight quarters.

Based on the stock's current perch of $44.94, a 13.6% rally would put the shares around $51.05, while a drop of that magnitude would leave CYBR trading near $38.82. In either case, this type of dramatic share price move would force the cybersecurity stock out of a seven-month trading range between the $48 and $39 levels, with the upper rail reinforced by the security's slowly descending 300-day moving average; this trendline easily rejected a late-November rally attempt. So while the equity has recently muscled above its similarly troublesome 160-day moving average, the 300-day could easily stifle any post-earnings rally attempts.

cybr daily one-year chart

Short sellers have responded eagerly to CyberArk stock's bleak year-over-year slump of 16.3%, with the number of CYBR shares sold short ballooning by more than 125% over the past two reporting periods. With a short interest ratio of 4.8 days to cover, this raises the possibility of a post-earnings short-squeeze rally in the event of an upside surprise, as weaker bearish hands hit the exits -- but given the equity's long-term downtrend and the presence of looming resistance, more aggressive shorts are likely to view any post-event pop as an opportunity to ramp up their bets against the stock.

And the options market appears to be tipping the scales toward a bearish post-earnings move from CYBR. The equity's 30-day implied volatility skew checks in at 12%, according to Trade-Alert, which registers in the 86th percentile of its annual range. In other words, short-term CyberArk puts have priced in higher volatility expectations relative to their call counterparts only 14% of the time in the last year.
 
 

You have the chance to join one of Bernie's most exclusive programs, complete access at HUGE savings!

As we prepare for a new administration to take the reins in Washington, the near-term market landscape is rife with uncertainty.

The Federal Reserve has already hinted at the turbulence ahead, lowering its interest rate outlook for 2025.

Meanwhile, breakthroughs in artificial intelligence (AI), quantum computing, and other transformative sectors have unlocked incredible profit potential.

But these opportunities are fleeting, and timing is everything. That's where Quick-Hit Trader comes in.

Quick-Hit Trader is designed for precision and speed, getting you in and out of the market in a flash. While other investors scramble to navigate volatile conditions, you'll have access to expertly curated trades that leverage these rapid shifts to deliver explosive profits in short order.

This is your chance to capitalize on the fast-moving market like never before. Are you ready to make your move?