Surging Fastly Stock Attractive Target for Options Bulls

FSLY premium is affordably priced at the moment, too

Deputy Editor
Dec 10, 2020 at 3:52 PM
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The shares of Fastly Inc (NYSE:FSLY) are up 6.3% at $96.70, but the IT services specialist remains a ways off its all-time high of $136.50. Nevertheless, the pullback was contained by FSLY's 160-day moving average, although the round $100 will be an area to watch going forward, as this week's 16% rally has sputtered out just below here. One thing's for sure, options traders are targeting calls with gusto.

FSLY Stock Chart

More specifically, 126,000 calls have exchanged hands -- double the what's typically seen at this point and volume pacing in the 99th percentile of its annual range -- versus just 16,000 puts. The weekly 12/11 100-strike call is the most popular, and new positions are being opened there, followed by the December 100 call. This suggests that these traders are speculating on more upside for Fastly by the time the contract expires tomorrow and next Friday, respectively.

Echoing this, FSLY sports a 50-day call/put volume ratio of 4.45 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than all other readings in its annual range, indicating a much healthier-than-usual appetite for long calls of late.

Meanwhile, now looks to be the opportune time to enter Fastly stock with options. According to the security's Schaeffer's Volatility Index (SVI) of 45%, which sits in the 16th percentile of all other annual readings, which means options traders are pricing in relatively low volatility expectations at the moment -- a boon for premium buyers.

Plus, the equity's Schaeffer's Volatility Scorecard (SVS) sits up at 77 (out of 100.) This means the stock has greatly exceeded option traders' volatility expectations during the past year -- a boon for options buyers.


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