Roku (ROKU) has been underperforming on the charts, down 61.8% year-to-date with overhead pressure at the 50-day moving average. Today, the stock is trading at two-year lows ahead of the company’s first-quarter report, due out after the close tomorrow, April 28. The stock is down 4.1% to trade at $88 — earlier as low as $85.45. A bear note is weighing on the streaming service today, after BofA Global Research slashed its price target to $145 from $235, citing several near-term growth challenges.
Options traders are pricing in a 27.8% post-earnings swing ahead of the event, which is much larger than the 9.5% move the stock has averaged after its last eight reports, regardless of direction. Of these reports, only three were positive, and the stock is still struggling to recover from last quarter’s 22.3% next-day drop. It’s also worth noting that ROKU landed on the Short Sale Restricted (SSR) list today amid the negative price action.
There’s been plenty of pessimism in the options pits lately. The security’s 50-day put/call volume ratio of 1.13 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than 99% of readings from the past year, showing long puts being targeted at a much faster-than-usual rate. These traders are in luck, as the security’s Schaeffer’s Volatility Scorecard (SVS) sits at a relatively high 90 out of 100, meaning ROKU has exceeded option traders’ volatility expectations during the past year.
Meanwhile, though short interest has begun to unwind, it still represents 5.9% of the stock’s available float. Plus, Roku stock could already be due for a short-term bounce, as the stock’s 14-day Relative Strength Index (RSI) of 21.1 sits firmly in “oversold” territory.
Credit: www.forbes.com /