Is More Upside Ahead for Cyberark Software Ltd (CYBR)?

Cyberark Software Ltd (CYBR) hit its highest perch on record today

Feb 20, 2015 at 1:48 PM
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Cybersecurity stocks have been all the rage of late, as evidenced by the massive year-to-date gains in sector components Cyberark Software Ltd (NASDAQ:CYBR) and FireEye Inc (NASDAQ:FEYE). In fact, amid calls from Washington for stricter cybersecurity measures and a slew of data breaches on big companies -- most recently insurance giant Anthem Inc (NYSE:ANTM) -- shares of CYBR have more than doubled in value this month to trade at $68.47, and hit a record high of $68.80 earlier. In the options pits, speculators have been scrambling to get a piece of the pie.

Daily Chart of CYBR Since January 2015

Today, in fact, overall options volume is running at nearly five times the expected intraday amount, with calls having the slight edge over puts. By the numbers, 8,249 calls have been exchanged, versus 7,112 puts. Short-term contracts are in high demand, too, per CYBR's 30-day at-the-money implied volatility, which has jumped 8.3% to 77.0%.

Widening the sentiment scope reveals today's call-skewed session is just more of the same. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), CYBR's 10-day call/put volume ratio rests at 2.22, meaning more than two calls have been bought to open for each put over the past two weeks. Regardless, CYBR's call and put open interest are each resting at record levels, with more than 19,000 of the former and 16,600 of the latter outstanding.

Outside of the options pits, sentiment is skewed more toward the skeptical side. For starters, a healthy 9.6% of the stock's float is sold short -- suggesting that some of the recent call buying may be at the hands of shorts hedging against any additional upside. Elsewhere, roughly two-thirds of covering analysts maintain a tepid "hold" recommendation, and the average 12-month price target of $45.86 stands at a steep discount to current trading levels. Should Cyberark Software Ltd (NASDAQ:CYBR) continue to rally, a round of short-covering and/or some upwardly revised analyst notes could add fuel to the fire.

 

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