Selling Pressure Is Ramping Up on This Cybersecurity Stock

Short-term CYBR options are attractively priced right now

Nov 28, 2017 at 10:01 AM
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CyberArk Software Ltd (NASDAQ:CYBR) has underperformed on the charts this year, adding a meager 3% in 2017 and shedding 10% year-over-year. The software stock rallied after hitting an annual low of $39.34 on Aug. 30, but is still badly underperforming the Nasdaq Composite (IXIC) and Russell 2000 Index (RUT). Plus, the stock is now staring up at a formidable challenge in the $48 area; the security's descending 320-day moving average is moving into the region, which also represents a triple of CYBR's $16 IPO price.

WT Series CYBR

 

Short sellers have been flocking to CYBR. Short interest increased by nearly 47% during the last reporting period to 2.02 million shares, and has more than doubled from its mid-September lows. These bears could view the recent rally as an opportunity to build their bets against the stock, with the resulting selling pressure creating a fresh headwind -- and with short interest still 25% below its year-to-date high, there's plenty of room to grow here.

Furthermore, it's a good time to target near-term CYBR options. CYBR's Schaeffer's Volatility Index (SVI) of 26% ranks lower than 99% of other such readings from the past year, meaning volatility expectations are unusually muted for short-term options.

Subscribers to Schaeffer's Weekend Trader Alert options recommendation service received this CYBR commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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