Surging Tech Stock Ripe for Bullish Options Trade

DATA stock shorts are likely feeling the heat

Oct 2, 2018 at 10:13 AM
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Tech concern Tableau Software Inc (NYSE:DATA) has been storming the charts long term, most recently climbing to a three-year high of $118.07 on Sept. 13. DATA has added about 61% year-to-date, benefiting from double-barreled support at its 40-day and 80-day moving averages. Given this foundation of outperformance, now seems to be the perfect time for bulls to bet on Tableau Software stock’s next surge higher.

WKEND Chart DATA

 

Digging deeper, short interest rose 14% on DATA in the last two reporting periods, simultaneously with the stock’s mid-August rally. Shorted shares now represent 5.5% of the stock's total available float, and at the software concern’s average daily trading volume, it would take shorts a full week to cover their bearish bets. In other words, short-covering could fuel another rally.

Looking toward analyst sentiment, a large portion of those covering the software concern have been pessimistic, leaving DATA well overdue for upgrades. Specifically, 15 of the 26 brokerages still sport "hold" or "sell" recommendations.

Lastly, the stock's Schaeffer's Volatility Index (SVI) of 32% sits in just the 22nd annual percentile, revealing low volatility expectations are being priced into near-term contracts. Meanwhile, our recommended call option has a leverage ratio of 5.2, and will double in value on an 18.8% increase in the underlying security.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this DATA 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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