Option Bulls Circle Cyberark Software Ltd (CYBR)

Cyberark Software Ltd (CYBR) call options have tripled puts thus far

by Andrea Kramer

Published on Mar 30, 2015 at 1:55 PM
Updated on Apr 20, 2015 at 5:32 PM

The shares of cybersecurity firm Cyberark Software Ltd (NASDAQ:CYBR) are notably higher in early afternoon action, up 4.5% at $54.60. The stock has now added more than 37% in 2015, and option traders today are rolling the dice on even more upside in the short term.

CYBR calls are trading at 1.3 times the average afternoon clip, and have more than tripled puts thus far. Most active is the April 55 call, which speculators are seemingly buying to open. The volume-weighted average price (VWAP) of the calls is $3.01, meaning the buyers will make money if CYBR conquers $58.01 (strike plus VWAP) by the close on Friday, April 17, when front-month options expire. Risk, meanwhile, is capped at the initial premium paid, should CYBR remain beneath the strike through the options' lifetime.

However, CYBR's 30-day at-the-money implied volatility sits at 71.5% -- in the 27th percentile of its annual range. For comparison, the equity's 30-day historical volatility is docked at 76.2%, suggesting now is an opportune time to buy CYBR's short-term options.

While Cyberark Software Ltd (NASDAQ:CYBR) has outperformed the broader S&P 500 Index (SPX) by 49 percentage points during the past two months, short interest skyrocketed by 58.8% during the last couple of reporting periods. Likewise, five of eight analysts maintain "hold" or worse ratings, and the consensus 12-month price target of $48.33 represents a discount to CYBR's current price. Should the shares resume their quest for new highs -- the equity peaked at $70.48 in mid-February -- a mass exodus of shorts or a round of upbeat analyst attention could add fuel to the equity's fire.


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