ROKU has found support near its 80-day moving average
The shares of Roku Inc (NASDAQ:ROKU) are up 3% ahead of the bell, after a ban on its devices in Mexico was lifted. The ban resulted from a copyright dispute due to hackers and pirated content. The streaming stock is also likely enjoying a halo lift from Netflix (NFLX), following the sector peer's upbeat earnings report.
On the charts, Roku stock had been flying since its early April bottom near $30, adding 150% and nabbing a record high of $77.56 on Oct. 1. Since then, though, the equity pulled back, and has shed nearly 13% in October as of yesterday's close. The good news is that the shares appear to have found a safety net in their 80-day moving average, which contained the pullback amid last week's broad market sell-off.
Yet there is still plenty of skepticism baked into the tech stock. Of the 12 brokerages covering ROKU, six rate it a tepid "hold." And while short interest fell in the most recent reporting period, the 8.43 million shares sold short represents a whopping 54% of the stock's total available float.
In the options pits, puts have risen in popularity lately. This is indicated by the 10-day put/call volume ratio of 0.89 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks in the 92nd percentile of its annual range. While this ratio indicates calls have slightly outnumbered puts on an absolute basis, the high percentile suggests the appetite for bearish bets has been much healthier than usual.
The good news for options traders is that ROKU sports a Schaeffer's Volatility Scorecard (SVS) of 89 out of 100, which shows the stock has tended to make larger-than-expected moves on the charts compared to what the options market had priced in over the past year.