Technical Glitches Help Buoy Cybersecurity Stocks

Cyberark Software Ltd (NASDAQ:CYBR), FireEye Inc (NASDAQ:FEYE), and Palo Alto Networks Inc (NYSE:PANW) pop as technical glitches spook the Street

Jul 8, 2015 at 2:30 PM
facebook X logo linkedin

A number of cybersecurity stocks are gaining ground today after technical glitches grounded United Continental Holdings Inc (NYSE:UAL) flights and halted trading on the New York Stock Exchange (NYSE). While those with knowledge of the matters insist that neither is a result of any hacking activity, Wall Street has been effectively spooked. Three names, specifically, that -- after yesterday's breather -- appear to be benefiting from the fear are Cyberark Software Ltd (NASDAQ:CYBR), FireEye Inc (NASDAQ:FEYE), and Palo Alto Networks Inc (NYSE:PANW).

CYBR, for example, is up 1.6% at $57.73 -- extending its year-to-date lead to 46%. In the options pits, calls are outpacing puts by a more than 2-to-1 margin. Traders appear to be betting on additional upside, with possible buy-to-open activity happening at the security's July 60 call.

Elsewhere on the Street, though, analysts have yet to get behind Cyberark Software Ltd's longer-term uptrend. Nearly 63% of those covering the shares maintain a "hold" or "strong sell" rating, leaving the door wide open for a round of upgrades to help fuel the equity's fire.

FEYE, meanwhile, has tacked on 0.6% to trade at $47.93, and is now sporting a 52% year-to-date advance. Call players are making a rare appearance in FEYE's options arena today, with the contracts changing hands at 1.9 times the average intraday pace. It seems safe to assume new positions are being purchased at the weekly 7/10 48-strike call, as speculators roll the dice on an extended run higher through expiration at this Friday's close.

As noted, today's accelerated call activity marks a change of pace in FEYE's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), FireEye Inc's 10-day put/call volume ratio of 0.95 sits at an annual high. A continued shift in sentiment among option traders could translate into tailwinds for the security.

Finally, PANW is 1.3% higher at $173.81, after earlier taking a sharp bounce off its 40-day moving average. The shares have now rallied more than 42% in 2015 -- and are fresh off a June 22 record high of $185 -- and today's speculators think there's more room to run. Specifically, it appears traders are initiating new long positions at the security's weekly 7/10 180-strike call, betting on more upside through week's end.

Outside of the options pits, short sellers have been piling on in droves. Short interest jumped 21.3% in the last two reporting periods, and now accounts for a healthy 6.8% of the stock's available float. In fact, it would take nearly four sessions to cover all of Palo Alto Networks Inc's shorted shares, meaning there's sideline cash available to help buoy the security.

Unlock Weekend Profits with Chris Prybal's Favorite Strategy Up +487.5% in 2024

With the markets going left, right, and sideways, you need to have a plan now more than ever. 

Expert Trader Chris Prybal is no stranger to volatility, and has mastered finding big stock rallies while other traders aren't looking over the weekend. Rallies that produced gains like +207% on RTX calls, +236% on MARA calls, and +238% on NET calls.

A few simple moves on Sunday at 7pm could be the “Secret Sauce” your portfolio needs to not just stay afloat, but make unprecedented gains in this turbulent market.

Don’t sit on the sidelines, beat the market with Chris Prybal's strategy. Join him now!