Cognizant Technology Solutions Stock Looks Set to Spook Bears

IT specialist Cognizant Technology Solutions Corp (NASDAQ:CTSH) has tacked on 29% from its late-September annual low, including a roughly 5% advance year-to-date. The shares pulled back toward the round $50 level early last month, but quickly bounced from support at the 200-week moving average. The stock looks set for another leg higher, with heavy put open interest in the front-month April series residing at the underfoot 57.50 strike, which could serve as support as expiration approaches.

Short interest on CTSH has been building lately, jumping by more than 40% in the two most recent reporting periods, even as the shares continue to rise. Should these bears abandon their underwater positions, the stock could see an extra boost. Plus, six analysts currently rate the equity a "hold" or worse, leaving the door open for future upgrades to lift the shares.

Options traders are unusually put-heavy toward CTSH, purchasing more than nine puts for each call over the past 10 sessions at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The resulting put/call volume ratio of 9.49 is docked just 2 percentage points from an annual bearish high. Likewise, the security's Schaeffer's put/call open interest ratio (SOIR) of 1.71 -- in the 91st percentile of its 12-month range -- shows put open interest far outweighing call open interest among options set to expire in three months or less. An unwinding of bearish sentiment among the options crowd could add fuel to CTSH's fire.

With a Schaeffer's Volatility Index (SVI) of 21%, lower than 87% of all comparable readings from the past year, CTSH's short-term options are currently well-priced, from a volatility perspective. That makes it a prime time to pick up premium. What's more, our recommended call option boasts a leverage ratio of 7.4, and will double in value on a 12.6% rise in the underlying shares.