Palo Alto Options See Heavy Volume as Stock Climbs to Six-Month High
$Palo Alto Networks (PANW.US)$ options are attracting heavier trading volume as the stock climbed to the highest since February, buoyed by better-than-expected earnings and a rosier outlook.
Implied volatility rose to 31.82% Tuesday, the highest since March, data tracked by moomoo showed. That could be attracting speculators and investors into the stock's options market where they could benefit from increased price swings. The second most active Palo Alto options are calls giving the holders the right to buy the stock at $370 by the end of the week.
The price of those calls fell as much as 89% in early trading when the contract was still out of the money. As shares climb above the $370 strike price, buyers came piling back into the calls that are now in-the-money. The contract is now up 19%, wiping off earlier declines. As a result, the volume of those calls reached 7,670 as of 12:11 p.m. in New York, more than quadruple the open interest.
After the market closed Monday, the cybersecurity giant reported that fiscal fourth quarter adjusted earnings rose to $1.51 a share, from $1.44 a year earlier as operating margins increased. Analysts, on average, expected adjusted earnings of $1.41, according to estimates compiled by Bloomberg. Revenue for the three months ended July 31 also exceeded expectations.
For fiscal year 2025, the company forecast total revenue in the range of $9.10 billion to $9.15 billion, while adjusted EPS was seen at $6.18 to $6.31. The midpoint for each of those metrics exceeded what analysts were expecting.
"As we look forward to fiscal year 2025 and beyond, we are focused on scaling our Next-Generation Security business through continued innovation and execution," Palo Alto Chief Executive Officer Nikesh Arora said in the company's earnings release.
Stifel analyst Adam Borg raised his price target on the stock to $385, from $360, while BTIG boosted its target to $395, from $366, Benzinga reported.
The positive sentiment is also showing in capital trend data. So far, the stock has seen fund inflows outpaced outflows by $204.93 million, data tracked by moomoo showed. That trimmed this month's net outflow to $54.6 million.
Despite the bullish price targets, technical indicators tracked by moomoo are flashing early warning signals that the stock rally could soon run out of steam. Eleven of the 15 gauges, including the Bolliger Band seen below, are showing that the stock could be overbought, and the trend may be turning bearish.
Share your thoughts on the stock below, and if you have a price forecast, vote below.
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Options trading entails significant risk and is not appropriate for all customers. It is important that investors read Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request. Moomoo does not guarantee favorable investment outcomes. The past performance of a security or financial product does not guarantee future results or returns. Customers should consider their investment objectives and risks carefully before investing in options. Because of the importance of tax considerations to all options transactions, the customer considering options should consult their tax advisor as to how taxes affect the outcome of each options strategy. All company analysis information is provided by third parties and not by Moomoo Financial Inc. Any illustrations, scenarios, or specific securities referenced herein are strictly for informational purposes and is not a recommendation. Past investment performance does not guarantee future results. Investing involves risk and the potential to lose principal. This content is also not a research report and is not intended to serve as the basis for any investment decision. The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Furthermore, there is no guarantee that any statements, estimates, price targets, opinions or forecasts provided herein will prove to be correct.
Options trading entails significant risk and is not appropriate for all customers. It is important that investors read Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request. Moomoo does not guarantee favorable investment outcomes. The past performance of a security or financial product does not guarantee future results or returns. Customers should consider their investment objectives and risks carefully before investing in options. Because of the importance of tax considerations to all options transactions, the customer considering options should consult their tax advisor as to how taxes affect the outcome of each options strategy. All company analysis information is provided by third parties and not by Moomoo Financial Inc. Any illustrations, scenarios, or specific securities referenced herein are strictly for informational purposes and is not a recommendation. Past investment performance does not guarantee future results. Investing involves risk and the potential to lose principal. This content is also not a research report and is not intended to serve as the basis for any investment decision. The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Furthermore, there is no guarantee that any statements, estimates, price targets, opinions or forecasts provided herein will prove to be correct.
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