FLSY Options Fly Off The Shelves After Dismal Q3 Outlook

The brokerage bunch is abuzz, too

Deputy Editor
Oct 15, 2020 at 11:18 AM
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The shares of Fastly Inc (NYSE:FSLY) are taking a nosedive this morning, down 25.9% at $91.25, after the delivery network firm cut its third-quarter revenue forecast after usage from its largest customer missed expectations -- much to the surprise of many on Wall Street. While Fastly didn't name names, many are speculating that this customer could be TikTok -- the popular social media app that's seen plenty of backlash over security and privacy concerns during the past few months.

Analysts have been quick to respond with bear notes. Baird downgraded FSLY to "neutral" from "outperform," and cut its price target to $85 from $105. Stifel, meanwhile, slashed its price target to $77 from $98. Coming into today, the 12-month consensus price target of $89.90 sat at a 1.3% premium to current levels. The brokerage bunch was already on the sidelines, with six sporting a "buy" or better, and the remaining five at a "hold" or worse. 

This is somewhat surprising, considering the security's 338% year-to-date lead, even after today's dip. In fact, the stock hit an all-time high of $136.50 just two days ago. Now FSLY is trading just below its early August post-bear gap levels, appearing to test long-time support at its 80-day moving average -- a trendline it hasn't closed below since April. 

Short-term options traders haven't been more put-biased of late, despite the recent highs, and could be cheering FLSY's downturn today. The security's Schaeffer's put/call open interest ratio (SOIR) of 1.21 stands higher than all readings from the past year. 

A look at today's options trading reveals a massive influx of puts and calls being traded. No matter the sentiment though, it looks like these traders can't get in the door fast enough, with option volume running in the 100th percentile of its 12-month range. So far, 86,000 calls and 80,000 puts have crossed the tape -- 11 times the intraday average. Most popular is the monthly 90 call, followed by the January 80 put, with positions being opened at both. 


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