Put Traders Load Up on DocuSign Stock Ahead of Earnings

DOCU has its year-to-date breakeven level as support

facebook twitter linkedin


Last time we checked on DocuSign, Inc. (NASDAQ:DOCU) was facing off with a key trendline ahead of earnings. Now, three months later, the software stock is contending with a much different technical landscape ahead of its third-quarter corporate report, set for after the market closes on Thursday, Dec. 2. 

DocuSign stock has shed 20% in the last three months, and was last seen down 4.3% to trade at $235.79, a far cry from its Aug. 10 record high of $314.76. Going forward, the shares will look to end 2021 above their year-to-date breakeven level, which stand at 6% right now. 

Put traders have been active lately, as revealed by DOCU's 10-day put/call volume ratio of 1.76 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 99% of readings in its annual range. Echoing this, the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.33 stands higher than 98% of annual readings, meaning short-term options traders have rarely been more put-biased. 

Those bearish bettors could be in trouble, because DocuSign has a rather upbeat post-earnings history the last two years. This includes a 19.8% bull gap back in June, and a 5.3% pop back in September. This time around, the options market is pricing in a post-earnings move of 12.6%, larger than the average post-earnings move of 8.6% the last eight quarters.

From a fundamental point of view, DocuSign stock continues to be an exciting growth opportunity, with grown revenues 246% since fiscal 2018 and increased net income by $262 million since fiscal 2019.

However, DocuSign stock’s valuation is still up substantially since the beginning of the COVID-19 pandemic (more than triple its March 2020 lows), making it a less attractive buy in the short-term. DOCU also has forward price-earnings ratio of 114.94 and a price-sales ratio of 26.82, further adding weight to the argument that DocuSign stock is overvalued.

 

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! 

 


 


 
Special Offers from Schaeffer's Trading Partners