The Reason Datadog Stock Could Rally Soon

The stock is jumping higher today despite a bear note

Deputy Editor
Apr 19, 2022 at 1:11 PM
facebook twitter linkedin


Datadog Inc (NASDAQ:DDOG) has fallen far since its Nov. 17 all-time high of $199.68. Despite a 56% year-over-year gain, the shares have taken a 9% haircut in April alone. The good news is this month's pullback has the software stock encountering  a historically bullish trendline that could be beneficial to short-term options traders, if past is precedent. 

Yesterday, DDOG came within 2% standard deviation of its 320-day moving average. Per data compiled by  Schaeffer's Senior Quantitative Analyst Rocky White, four similar occurrences of a pullback to this trendline has occurred in the past three years. White's data shows Datadog stock was higher one month after each of these signals, averaging a 12.8% pop. From its current perch, a similar move would have DDOG erasing its sharp monthly deficit.

Furthering the bullish case for DDOG could be the stock's 14-day relative strength index (RSI) of 32.3 sits just on the cusp of "oversold" territory. Some of this bounce could be in effect already; DDOG is up 5% today, despite a price-target cut from Barclays to $190.

DDOG Chart April 19

An unwinding of pessimism could help boost DDOG. According to the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.92, which ranks in the 94th percentile of its annual range, short-term options traders have rarely been more put-biased. 

Options traders are in luck, as Datadog stock's Schaeffer's Volatility Scorecard (SVS) stands at a relatively high 83 (out of a possible 100). This is a boon for premium buyers, as it indicates DDOG has exceeded options traders' volatility expectations in the last 12 months.

 

Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

 
Schaeffer's Daily Bulletin Offer
 


 


 
Special Offers from Schaeffer's Trading Partners