Cyberark Software Ltd (CYBR) Call Buyers Take Note of New Acquisition

Cyberark Software Ltd (NASDAQ:CYBR) is higher today, after the firm announced the acquisition of Viewfinity

by Karee Venema

Published on Oct 7, 2015 at 11:30 AM
Updated on Jun 24, 2020 at 10:16 AM

Cyberark Software Ltd (NASDAQ:CYBR) is up 1.1% today at $52.75, on news the company has acquired fellow cybersecurity specialist Viewfinity for $30.5 million. This isn't the first time CYBR has been in the M&A spotlight, although in recent weeks, the speculation has had the firm on the to-be-acquired end of the chatter

Today's positive price action is likely being celebrated in the options pits, where speculators have been loading up on long calls in recent weeks. Specifically, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 4,109 calls over the past month, compared to 2,083 puts.

Echoing this call-heavy backdrop is CYBR's Schaeffer's put/call open interest ratio (SOIR) of 0.54. Simply stated, call open interest nearly doubles put open interest among options expiring in three months or less.

In the front-month series, peak call open interest of 1,867 contracts is found at the October 65 strike. According to the ISE, CBOE, and PHLX, a number of these calls have been bought to open since late August, meaning traders are expecting CYBR to settle north of $65 at next Friday's close -- when the options expire. 

Considering the stock hasn't settled a session north of here since late June, there could be an ulterior motive to this activity. Specifically, short interest on CYBR climbed 18.6% in the two most recent reporting periods, and now accounts for 21.6% of the equity's available float. In other words, some of these out-of-the-money calls could be a result of shorts hedging their bearish bets. Regardless, the most the call buyers stand to lose is the initial premium paid.

Technically speaking, today's upside is just more of the same for Cyberark Software Ltd (NASDAQ:CYBR). Year-to-date, the shares have rallied roughly 33%. More recently, though, the stock's upside has been contained by its newly formed 200-day moving average, currently located at $54.78.

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