CrowdStrike Options Hot After Chilly Goldman Downgrade

CRWD stock was downgraded to "sell"

Oct 11, 2019 at 10:51 AM
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CrowdStrike Holdings Inc (NASDAQ:CRWD) shares are down 4.7% at $58.53 -- and pacing for a fourth straight loss -- after analysts at Goldman Sachs downgraded the cybersecurity concern to "sell" from "neutral." The brokerage firm also sliced its price target on CRWD shares to $66 from $83, citing valuation and "elevated" expectations for the company. Against this backdrop, CrowdStrike options volume is running hotter than normal this morning.

The equity has seen nearly 2,500 calls cross the tape in the first 90 minutes -- nearly double the average pace at this point in the day. Meanwhile, around 1,100 puts have changed hands -- about 1.5 times the norm.

Most popular is the November 65 call, which has seen most action on the ask side, pointing to buyer-driven activity. Those buying the calls to open expect CRWD stock to rebound north of $65 by the time the options expire on Friday, Nov. 15.

However, today's appetite for CrowdStrike calls over puts is nothing new. During the past 10 sessions, option buyers picked up 1.74 CRWD calls for every put on the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX).

Today's negative analyst attention is relatively new for the security, though. Prior to today, CRWD boasted 10 "buy" or better endorsements, compared to four "holds" and not a single "sell" rating. Plus, the consensus 12-month price target stands at $88.76 -- a more than 50% premium to current levels.

CrowdStrike stock went public in mid-June, after the company priced its initial public offering (IPO) at $34 per share. The equity subsequently rallied as high as $101.88 in late August, before embarking on a steep pullback. Specifically, CRWD is off more than 40% since the aforementioned peak, and touched a record low of $51.61 on Sept. 30. Today, however, the equity is attempting to maintain a spot atop its Day 1 close of $58.

CRWD stock chart oct 11


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