Six-Figure Bearish Options Bet on Rallying Citrix Systems Stock

Analysts are also skeptical of Citrix stock

by Josh Selway

Published on May 1, 2018 at 2:15 PM
Updated on May 1, 2018 at 2:39 PM

Software stock Citrix Systems, Inc. (NASDAQ:CTXS) has continued to push higher following last week's earnings-induced bull gap, earlier tapping an all-time high of $104.88. At last check, the shares were trading up 1.4% at $104.30, putting their year-to-date gain at 18.5%. The move comes thanks in part to Goldman Sachs, which added Citrix to its "Conviction Buy" list this morning. But even with CTXS stock rallying, put options are seeing unusual attention in today's trading.

In fact, roughly 4,700 puts have traded today, compared to an average daily volume of just 639. Almost all the activity has taken place at the September 90 and 100 puts, which an options trader seemingly used to initiate a long put spread. It looks like the 90-strike puts were sold for $1.85 apiece, and the 100-strike puts were bought for $4.70 each, indicating an initial cash outlay of $635,550 ($2.85 premium paid * 2,230 contracts per spread * 100 shares per contract).

If this is the case, this options bear is hoping to see Citrix Systems stock fall to $90 over the next four months or so. That would mark a roughly 14% decline from current levels for the shares. While this is clearly a bold bet, it seemingly comes at an opportune time. Specifically, the implied volatility term structure for September options is low compared to longer-term December options -- currently 24.4% versus 25.5%.

For what it's worth, analysts covering CTXS share this skeptical outlook. Of the 16 brokerages in coverage, only four are bullish, and the shares are sitting just below the average 12-month price target of $105.75. As contrarian traders, we would view the security as a potential bullish target, given the strong technical performance and bearish sentiment across Wall Street.

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