Why Bulls Should Bet on This Software Stock Now

SE options are attractively priced, too

by Research Dept.

Published on Dec 24, 2019 at 8:10 AM
Updated on Jun 24, 2020 at 10:16 AM

Software name Sea Ltd (NYSE:SE) has more than tripled in 2019, and over the last few months have been on a steady trend higher. With a layer of support embedded in the rising 20-day moving average and the peak call open interest expiring at the December 40-strike, now looks like the perfect opportunity to bet on SE’s next leg higher.

WKALT SE chart

 

In the options pits, the stock's Schaeffer's put/call open interest ratio (SOIR) comes in at 1.02, and ranks in the 94th percentile of its annual range. In simpler terms, this shows a larger-than-usual put-skew among options traders. An unwinding of these bearish bets could trigger a surge in SE shares.

Lastly, short-term options premiums on Sea look relatively cheap at the moment, based on the equity's Schaeffer’s Volatility Index (SVI) of 37%, which ranks in the 1st percentile of its annual range. Our recommended call has a leverage ratio of 4.3, and will double in value on an 24.9% rise in the underlying security.

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