The stock’s 40-day moving average has historically been bullish
The shares of Zoom Video Communications Inc (NASDAQ: ZM) are flat this afternoon, most recently down 0.1% to $ 400.26. The stock climbed yesterday’s 6.9% gain to hit a one-month high of $ 403 today. This region has served as a cap for ZM since early March, but there is reason to believe that a breakout of this consolidation pattern could be on the horizon for the video chat stock.
According to data from Schaeffer’s Senior Quantitative Researcher Rocky White, ZM came back just within one standard deviation of its 40-day moving average after a prolonged period above the trendline. White’s study shows that Zoom stock took a similar move five more times. One month after these cases, security was 75% higher, giving an average return of 24.6%. Should ZM make a move of comparable magnitude from its current location, it could bring equity back within reach of the $ 500 mark – a region it hasn’t touched since late last year.
Options traders are already on board for a rebound, it seems. On the International Securities Exchange (ISE), the Cboe Options Exchange (CBOE), and the NASDAQ OMX PHLX (PHLX), Zoom stock has a 10-day call / put volume ratio of 4.72, which is higher than any other Values from last year. This implies that options traders take calls much faster than usual.
This predilection for these bullish bets is reflected in today’s trading, where the call volume is double what is normally common at the time, with 86,000 calls across the band today. The two most popular contracts are the weekly 8/6 410 and 400 strike calls, with positions being sold to open on both.
Although there is still a way out, Zoom is slated to be included in the profit statement at the end of the month after close of trading on Monday, August 30th. A quick look back at the stock’s post-earnings history over the past two years reveals a number of oversized moves, including a 15% decline in December 2020 and 40.8% after the latest report for the second quarter. Regardless of direction, ZM saw an average swing of 12.2% the next day.