Yahoo's Loss Is Check Point Software Technologies Ltd.'s (CHKP) Gain

A major ​Yahoo! Inc. (NASDAQ:YHOO) hack is lifting cybersecurity stock Check Point Software Technologies Ltd. (NASDAQ:CHKP), which could have short sellers and option bears spooked

Dec 15, 2016 at 3:09 PM
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Cybersecurity stocks are moving higher today, with Yahoo! Inc. (NASDAQ:YHOO) unveiling the biggest known hack in history, affecting more than 1 billion users. It was YHOO's second major hack disclosure of the past few months, drawing attention to digital security stocks. Among the equities on the rise is Israeli-based Check Point Software Technologies Ltd. (NASDAQ:CHKP), which could have short sellers and option bears shaking in their boots.

CHKP was last seen 0.6% higher at $85.40. The shares have added close to 15% since their October lows, gapping higher after a well-received earnings report, and could be poised to break north of their recent trading range. The stock is now above its 200-day moving average -- a supportive trendline in the early part of 2016 -- as well as the $80-$82 region, which is roughly double its 2012 lows and represents CHKP's year-to-date breakeven level. 

Although CHKP has flexed some muscle on both the fundamental and technical fronts -- the firm's SandBlast anti-malware product enjoyed triple-digit sales growth last quarter -- Wall Street remains entrenched in the bearish camp. Short interest represents 7.8% of CHKP's total available float -- about two weeks' worth of pent-up buying demand, at the stock's average pace of trading. Should CHKP break out to the upside, there's plenty of fuel for a short squeeze.

Likewise, nearly eight Check Point Software Technologies Ltd. (NASDAQ:CHKP) puts have been bought to open for every call during the past two weeks on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The resulting 10-day put/call volume ratio of 7.77 is higher than 91% of all other readings from the past year, pointing to a much healthier-than-usual appetite for bearish bets over bullish. An unwinding of pessimism in the options pits could also fuel CHKP's fire.

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