Short-term Nutanix options are a bargain right now
Nutanix Inc (NASDAQ:NTNX) is climbing today, up 1.6% to trade at $52.52, after the cloud concern scored a $20 million deal with the U.S. Department of Defense -- the largest in the company's history. Prior to today's rally, NTNX had been pulling back sharply from its late-August highs above $63. However, the stock could now be poised for another leg higher in its longer-term uptrend, if history is any guide.
More specifically, Nutanix stock is fresh off a pullback to within one standard deviation of its 160-day moving average, after a lengthy stretch trading above this trendline. There has been just one other instance of NTNX pulling back to its 160-day trendline after trading north of it at least 60% of the time over the previous two months. This prior signal resulted in a one-week pop of 5.57%, and a one-month return of 23.88%, per Schaeffer's Senior Quantitative Analyst Rocky White.
A move of similar proportion this time around would put Nutanix stock north of $65 one month from now -- a fresh record high. Of course, that's an extremely small sample size of previous 160-day pullbacks to go on, but there's more reasons to believe NTNX's latest trendline bounce has legs to run higher.
Short interest has been on the rise, up nearly 15% in the most recent reporting period. These bearish bets now represent a healthy 5.76% of NTNX's total available float, and nearly five times the stock's average daily trading volume. A short squeeze could shake some of the weaker bearish hands loose, providing tailwinds for the equity.
For anyone considering speculating on a NTNX bounce with call options, now is a good time to do so. The stock has a Schaeffer's Volatility Index (SVI) of 48%, which ranks in just the 15th annual percentile. This reveals that unusually low volatility expectations are being priced into front-month options for the software stock.
In fact, the equity's 30-day at-the-money implied volatility of 50.2% registers in the 37th annual percentile, per Trade-Alert. That's a fairly slim premium over the current 30-day historical volatility of 48.9% for Nutanix stock -- a metric that arrives in the 64th percentile of its own 52-week range.