Tailwinds May be in Store for this Software Stock

It looks like the perfect time to pick up premium on CTXS

Feb 11, 2020 at 11:27 AM
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Software specialist Citrix Systems, Inc. (NASDAQ:CTXS) has been a major outperformer on the charts. Support from the 20-day moving average alongside a late-January post-earnings bull gap has the equity up 15% year-over-year. With CTXS also at its round 10% year-to-date mark, it looks like the ideal time for bulls to bet big.

WKALT CTXSD with 20MA Feb 7

Digging deeper, it looks like shorts are in covering mode. Short interest added on 13.3% during the most recent reporting period, and now accounts for 3.7% of the stock’s available float. At Citrix Systems stock’s average pace of trading, it would take short sellers a full week to buy back their bearish bets.

Plus, analysts are not overly enthusiastic on the stock, with 10 of the 12 in coverage calling CTXS a “hold” or worse. This could set the security up for a round of tailwind-inducing upgrades.

Lastly, volatility expectations look attractive for premium buyers, too, based on the Schaeffer's Volatility Index (SVI) of 17%, which ranks in the 18th annual percentile. What's more, our recommended call has a leverage ratio of 8.8, and will double in value on a 10.9% gain in the underlying stock.

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