Rebound Could be on Horizon for NetApp Stock

NTAP is one of the best stocks to own the week of Memorial Day

by Patrick Martin

Published on May 24, 2019 at 12:28 PM

We recently profiled the 25 best stocks to own during Memorial Day Week. Of the many tech stocks that appear on the list, NetApp Inc. (NASDAQ:NTAP) looks to be the most overdue for a rebound, the security just yesterday shedding 8% on the back of a weak quarterly report. 

Specifically, looking at S&P 500 Index stocks over the past 10 years, NTAP has turned in a 1.05% gain in that four-day stretch, per data from Schaeffer's Senior Quantitative Analyst Rocky White. That's good for fourth on the list among its sector peers. Further, since 2009, the tech name has ended the week higher seven out of ten times.

Daily Stock Chart NTAP

NetApp stock yesterday traded as low as $58.11, but pared those losses to finish at $61.66. And today, the shares are up 0.5%, to trade at $61.97. Year-to-date, NTAP is clinging to its breakeven level, but has a long way to go to reclaim support near the $66 area. More good news is that heading into today, the security's 14-day Relative Strength Index (RSI) stood at 30, in oversold territory.

Near-term options traders have been more put-heavy than usual on the stock. NTAP's Schaeffer's put/call open interest ratio (SOIR) stands at 2.08, meaning put open interest more than doubles call open interest among options set to expire in three months or less. Further, this ratio is higher than 90% of all other readings from the past year.

And on that note, options traders have come out in greater-than-usual numbers today. More than 6,400 NTAP options have changed hands, double the normal amount and volume pacing for the 93rd percentile of its annual range. One of the top contracts today is the weekly 5/24 62-strike call, where new positions are being opened, potentially in hopes of making a quick profit before expiration at the close.

Options look to be an ideal vehicle to bet on NTAP too, with the security's Schaeffer's Volatility Index (SVI) of 32% ranking in the 22nd percentile of its annual range. This indicates short-term options are pricing in relatively low volatility expectations at that time.

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