This Tech Stock Seems Ripe for a Short Squeeze

F5 Networks stock is overdue for upgrades

Aug 21, 2018 at 10:40 AM
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The technical setup for software stock F5 Networks, Inc. (NASDAQ:FFIV) appears quite strong. The shares are up more than 53% year-over-year, and recently took out the $174 level -- roughly two times their 2016 bottom. What's more, a post-earnings pullback in late July was quickly erased, and a recent consolidation near the 52-week high could mark an opportune time for bulls to get in for the next leg higher.



Meanwhile, sentiment is overly bearish on the security. There are 17 brokerage firms in coverage, but 12 of them have "hold" or "strong sell" ratings, and the average 12-month price target sits below current levels. Traders should watch for upgrades and/or price-target increases to come through and help lift FFIV.

There's potential for a short squeeze, too. Short interest rose another 14.4% in the last two reporting periods, and lofty 7.2% of the total float is now held by short sellers.

Also, the stock's Schaeffer's Volatility Index (SVI) of 22% sits in just the 26th annual percentile, revealing low volatility expectations being priced into near-term contracts.

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


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