Crowdstrike Stock's Post-Earnings Pop Brings Out the Bulls

Additional tailwinds could come from a shift in the options pits

Digital Content Manager
Mar 17, 2021 at 10:41 AM
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The shares of Crowdstrike Holdings Inc (NASDAQ:CRWD) are up 3.6% at $203.33 this morning, after the cybersecurity name reported better-than-expected fourth-quarter earnings of 13 cents per share -- higher than analysts' estimates of eight cents per share -- as well as a revenue beat. The company attributed the results to healthy subscription and customer growth, as well as record operating and free cash flow. In response, the security earned at least six price-target hikes, including a lofty one from Needham to $275 from $200. 

The security has been cooling off from a Feb. 16, all-time high of $251.28 over the past month. However, the shares have been able to bounce off the supportive 100-day moving average, and have spent the last two weeks consolidating below $210. Year-over-year, CRWD remains up an astounding 419.9%.

Today's flurry of bull notes is interesting given analysts are already quite optimistic, with 16 of the 19 in question carrying a "buy" or better rating, while the remaining three call Crowdstrike stock a tepid "hold." Plus, the 12-month consensus target price of $242.48 is a 21.8% premium to current levels. 

And though short sellers have started to hit the exits, there is plenty of pessimism left to be unwound, which could push shares even higher. Short interest fell roughly 17% in the last two reporting periods, yet the 8.82 million shares sold short still make up a massive 42.6% of the stock's available float.

Additional tailwinds could come from a shift in the options pits, where puts are popular. This is per CRWD's 50-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 96% of other readings from the past 12 months. This suggests puts are being picked up at a faster-than-usual clip.

That shift could be starting today. So far, 12,000 calls and 9,344 puts have crossed the tape, which is five times the intraday average. Most popular is the monthly March 200 call, followed by the 180 put in the same series. Buyers of these options are expecting more upside for Crowdstrike stock by the end of the week, when these contracts expire.

These buyers are in luck, too, as CRWD options are quite affordable amid a post-earnings volatility crush. The stock's Schaeffer's Volatility Index (SVI) of 60% sits in the relatively low 17th percentile of its annual range. This means the security sports attractively priced premiums right now.

 

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