Why Crowdstrike Stock Looks Ready for a Bounce

Options look like a good way to bet on the stocks next move

Deputy Editor
Jul 27, 2021 at 1:23 PM
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The shares of tech name Crowdstrike Holdings Inc (NASDAQ:CRWD) have staged an impressive climb up the charts during the past couple months, with a brief pullback to the 40-day moving average launching the stock to a fresh record high of $272.63 on July 23. While the equity has taken a breather this week, off 3.7% at $255.13 in today's trading, there's reason to believe this negative price action could be short lived, with even more growth in CRWD's future. 

crwd stock chart july 27

In fact, CRWD's recent all-time high comes amid historically low implied volatility (IV) -- a bullish combination for Crowdstrike stock in the past. According to a study from Schaeffer's Senior Quantitative Analyst Rocky White, there have been another four times in the past five years when the security was trading within 2% of its 52-week high, while its Schaeffer's Volatility Index (SVI) stood in the 20th percentile of its annual range or lower. This is now the case with CRWD's SVI of 42%, which sits in the eighth percentile of its annual range.

According to White's data, one month after three of these signals, the security was higher, averaging an 11.1% return. From the stock's current perch, a similar move would put CRWD at a brand-new record high of $283.45.

Now looks like a good time to get in on CRWD's next move with options. In addition to sporting an incredibly low SVI, implying options traders are pricing in low volatility expectations at the moment, the stock's Schaeffer's Volatility Scorecard (SVS) sits at 91 out of a possible 100. This means Crowstrike stock tends to exceed these trader's volatility expectations -- a good thing for options buyers. 

 

 

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