Palo Alto Networks, Inc. (PANW) Traders Step Up Ahead of Earnings

Palo Alto Networks Inc (PANW) will report earnings tonight

by Alex Eppstein

Published on May 27, 2015 at 11:55 AM

Short-term options traders have been extremely call-focused toward Palo Alto Networks Inc (NYSE:PANW). The cybersecurity stock's Schaeffer's put/call open interest ratio (SOIR) checks in at 0.61, with calls outweighing puts among options with a shelf-life of three months or less. Additionally, this SOIR is lower than 94% of comparable readings from the previous year.

Short-term strikes are again all the rage today, ahead of the company's fiscal third-quarter earnings report, due out after the close. PANW options are trading at double the usual rate for this point in the session, with the weekly 5/29 series in focus.

Bullish bettors are targeting the weekly 5/29 165- and 167.50-strike calls, where potential buy-to-open activity is taking place. In other words, these speculators anticipate PANW will topple the respective strikes by Friday's close, when the series expires. Meanwhile, it appears others are buying to open the weekly 5/29 160-strike put, expecting the stock to breach $160 by week's end.

On the charts, Palo Alto Networks Inc (NYSE:PANW) has fared well -- up 32.4% year-to-date to wink at $162.30, and perched just south of yesterday's record high of $165.09. If history is any indicator, an earnings-based rally could lift the shares to new heights. During the past eight quarters, PANW has averaged a single-session post-event move of 6.3% -- the last six of which have been to the upside. Elsewhere, Cowen and Company earlier boosted its price target to $175 from $165, while underscoring its "market perform" rating.

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