Unpacking Okta Stock's Recent Selloff

Options traders have been loading up on OKTA puts

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Software stock Okta, Inc. (NASDAQ:OKTA) offers services to more than 10,000 organizations, including JetBlue (JBLU), Nordstrom (JWN), Siemens, Slack Technologies (WORK), T-Mobile (TMUS), Takeda, Teach for America, and Twilio (TWLO).

Carving out a channel of higher highs, OKTA raced to a record high of $294 by Feb. 12. What's followed was a sharp pullback to the $200 level, and a subsequent bearish flag pattern. There could be resistance forming at the -10% year-to-date level, despite the stock's sizable 91.5% year-over-year gain.

Options traders have started to take notice of the technical troubles. The stock sports a 10-day put/call volume ratio of 2.85 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 95% of readings from the past year. This implies a much healthier-than-usual appetite for long puts of late.

Regardless of direction, those looking to bet on Okta stock's next move might want to consider options. In light of the post-earnings volatility crush, the equity's Schaeffer's Volatility Index (SVI) of 44% stands higher than just 15% of all other readings from the 12 months, implying that near-term option traders are attractively priced at the moment, from a historical volatility perspective.

 

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