Scoop This Software Stock Up Now

Short-term call options are cheap right now

Feb 21, 2018 at 12:03 PM
facebook X logo linkedin


Tech stocks have been on fire this week, surging in part by Qualcomm's (QCOM) boosted buyout bid for NXP Semiconductors (NXPI). One name benefiting from sector tailwinds is Zendesk, Inc. (NYSE:ZEN), with shares of the software developer up 1.9% week-to-date to trade at $43.35, fresh off yesterday's record high of $43.65. If past is precedent, ZEN stock could be headed even higher -- and it looks to be a prime time to buy calls to bet on the equity.

Specifically, the equity's Schaeffer's Volatility Index (SVI) of 35% ranks in the 9th annual percentile, indicating low volatility expectations are being priced into short-term options. According to Schaeffer's Senior Quantitative Analyst Rocky White, there have been three other times since 2008 that ZEN stock has had muted front-month implied volatilities while trading within 2% of an annual high -- resulting in an average 21-day gain of 3.56%.

Based on the stock's current perch, another move of this magnitude would put it near $44.90 for the first time ever. As indicated above, this would just be more of the same for a security that's surged 54.8% year-over-year, and is pacing for back-to-back months of double-digit percentage gains.

A continued round of short covering could create even bigger tailwinds for ZEN shares. Though short interest has nearly halved since its mid-October peak, 3.33 million shares are still sold short -- nearly four days' worth of pent-up buying demand, at the average pace of trading.

Plus, Zendesk stock seems overdue for a round of price-target hikes, which could draw more buyers to the table. The average 12-month price target of $44.47 stands at a slim 2.7% premium to the equity's current perch.

 

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI