Options Bulls Charging Toward Red-Hot Software Stock

A short squeeze could provide more tailwinds to TEAM

Deputy Editor
Oct 16, 2020 at 12:19 PM
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Software development name Atlassian Corporation PLC (NASDAQ:TEAM) is pivoting higher today, up 1.8% at $194.40 at last check, a chip-shot from its all-time high close of $199.87. Guided higher by its ascending 10-day moving average, TEAM boasts a year-to-date lead of 60.8%, and options traders are taking notice.

TEAM Chart October 16

Today's positive price action has the bulls charging the security in droves. So far, 7,262 calls have crossed the tape -- four times the average intraday volume, and nearly five times the number of puts traded. Most popular is the October 200 call, with positions being opened, followed closely by the weekly 10/30 190-strike call. This suggests these traders are speculating on a lot more upside for TEAM by the time these contracts expire. 

This penchant for bullish bets is nothing new. In fact, in the last 10 days, 4,087 calls exchanged hands, compared to just 998 puts. This data at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands in the 96th percentile of its annual range.

A short squeeze could keep the wind at TEAM's back. Short interest is up 7.9% in the past two reporting periods, and now accounts for roughly 8.37 million shares, or 7.3% of the stock's total available float.

Those wanting to get in on the security's rise may want to consider options. Options traders are pricing in relatively low volatility expectations at the moment, per the stock's Schaeffer's Volatility Index (SVI) of 54%, which sits higher than just 31% of all other annual readings.


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