The shares have already had a big year
Software stock Five9 Inc (NASDAQ:FIVN) has been a steady climber from the past year, adding roughly 74% in the past 12 months. The shares have been consolidating near their all-time highs, recently finding a floor atop their earnings day low from February, right above the 50-day moving average. As such, it could be a good time to get behind this outperformer ahead of its next leg higher.
One upside driver from FIVN could come from a round of bullish analyst notes. Right now, the majority of brokerage firms have “hold” or “sell” ratings in place, a sentiment setup that doesn’t jibe with the stock’s performance. Some of these bears could feel compelled to upwardly revise their outlooks, which could bring more buyers to the table.
Even more shocking are the short interest levels on Five9. The number of shorted shares has skyrocketed over the past year, and this trend hasn’t slowed, with short interest up more than 25% in the last two reporting periods. These bears, who are certainly holding onto losing positions, hold 8.6% of the total float -- suggesting there’s room for short-covering tailwinds going forward.
Also making FIVN more attractive is its Schaeffer’s Volatility Scorecard (SVS) of 95 out of a potential 100, showing that options traders have consistently underestimated the equity’s volatility in the past year.
Subscribers to Schaeffer's Weekend Trader options recommendation service received this FIVN 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.