Software service Zendesk Inc (NYSE:ZEN) is down 1% at $90.86 this afternoon, a rare occurrence for the long-term outperformer. Below, we will take a look at recent data from Schaeffer's Senior Quantitative Analyst Rocky White, which suggests Zendesk stock may be ready for a fresh surge higher.
Specifically, the equity has climbed the charts since its mid-November sell-off of $45.60, last seen 60% higher year-over-year. Support has been repeatedly found at the rising 50-day moving average, aiding the stock to its most recent record high of $93.72 on June 10.
Diving right in, short-term option premiums on ZEN look relatively inexpensive at the moment. This is per the security's Schaeffer's Volatility Index (SVI) of 33%, which stands in the low 4th percentile of its annual range. In other words, near-term options are pricing in relatively low volatility expectations.
Since 2008, there have been three other times Zendesk shares were within 2% of a 52-week high and simultaneously sported an SVI in the bottom 20% of its annual range. After those signals, the stock was higher one month later 100% of the time, averaging a gain of 8.6%, according to data from White. Another surge of this size would put the shares at $98.67 -- a fresh record high.
Another reading suggesting an exodus of option bears could propel ZEN even higher is the stock's Schaeffer's put/call open interest ratio (SOIR). Standing at 0.93 and in the 86th percentile of its annual range, this suggests near-term traders have rarely been more put-heavy in the past year.
Short interest on Zendesk stock surged 12.8% during the most recent reporting period, and now accounts for 6.5% of the stock's total available float. In other words, it would take shorts nearly a week to cover their bearish bets.