Zoom Stock Set to Blow Past Technical Ceiling

Options bulls are circling Zoom stock

Digital Content Manager
Aug 5, 2021 at 2:41 PM
facebook twitter linkedin

The shares of Zoom Video Communications Inc (NASDAQ:ZM) are flat this afternoon, last seen down 0.1% at $400.26 . The stock is coming off yesterday's 6.9% surge, and earlier today hit a one-month high of $403. This region has acted as a ceiling for ZM since early March, but there's reason to believe a breakout from this consolidation pattern could be right on the horizon for the video chat stock. 

According to data from Schaeffer's Senior Quantitative Researcher Rocky White, ZM just came back within one standard deviation of its 40-day moving average after a lengthy period above the trendline. White's study shows Zoom stock has made a similar move five other times. One month after these instances, the security was higher 75% of the time, averaging a sizable 24.6% return. Should ZM stage a move of comparable magnitude from  its current perch, it could put the equity back within reach of the $500 level -- a region it hasn't touched since late last year. 

zm chart aug 5

Options traders are already on board for a rebound it would seem. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Zoom stock sports a 10-day call/put volume ratio of 4.72, which stands higher than all other readings from the past year. This implies options traders are picking up calls at a much quicker-than-usual clip. 

This penchant for these bullish bets is being echoed in today's trading, where call volume is running double what's typically seen at this point, with 86,000 calls across the tape so far today. The two most popular contracts are the weekly 8/6 410- and 400-strike calls, with positions being sold to open at both. 

While it's still a ways out, Zoom is scheduled to enter the earnings confessional at the end of the month, after the close on Monday, August 30. A quick look back at the stock's post-earnings history over the past two years shows a number of outsized moves, including a 15% drop in December 2020, and a 40.8% after its last second-quarter report. Regardless of direction, ZM averaged a next-day swing of 12.2%. 


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 


300x250 - Banner 3 - v1