Cloud Stock for Options Bears to Watch

WDAY has plenty of overhead resistance on the charts

Sep 27, 2022 at 1:34 PM

WDAY

Cloud concern Workday Inc (NASDAQ:WDAY) just pulled back below a pivot zone between the $152 and $154 levels. In addition, the shares experienced rejection last week near the 100-day moving average, and fell below the 80-day trendline -- both of which have been significant moving averages for the equity in the past. The security also just breeched a short-term uptrend and failed in its attempt to retest. What's more, The stock is now sitting below the 150-strike put level and a significant move lower could set up a delta hedge, while peak call resides at the 155-strike and could act as resistance through October's OPEX.

WDAY wt repost

Options traders are exceptionally call-biased, but the optimism is moving into a range where downside is typical and WDAY's price stalls out. This is per the stock's 10-day call/put volume ratio of 2.25 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). There's also room for downgrades amongst the brokerage bunch, as 30 of the 37 in coverage still recommend a "buy" or better.

Options look like a good route to go, as WDAY has frequently exceeded option traders' volatility expectations over the past year, according to the equity’s Schaeffer's Volatility Scorecard (SVS) of 71 out of 100. Our recommended put option has a leverage ratio of -4.65, and will double in value on a 17.88% drop in the underlying shares.

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