Because of the fall of 
PANW was due to the acquisition of CyberArk and as sympathy fall from 
FTNT but not because of fundamental reasons or sector/market issues, I used 1 year Fib Retracement to see what would be the worst bottom and best probability bounce taking in consideration that earnings will be very soon (Aug 18) and every short position will be most likely covered before earnings and the stock price taking a more down neutral level to go up or down after earnings.
So, considering this risk reward factors, last August 07th, when the stock went down to $166, I bought one Call Option OCT17 175 @7.75 just because this is the first time I trade this stock and it's not very liquid, and theta decay was less than -8, so I decided to place a swing trade and needed an option with low theta decay but maintaining 0.50 Delta.
The next day I say a Big Delta Long Vertical Trade made from a larger investor:
SELL -5,000 PANW 17OCT25 195 @2.82
BUY +5,000 PANW17OCT25 180 @6.45
That gave me more patience to wait for the bounce because the stock wasn't having the hard bounce I expected right away but someone invested almost 2 millions in this trade, which can be confirmed as Open Interest in the options chain.
Because this company has slightly beaten earnings expectations in the last quarters, and until now, there are no downgrades justifying the current price level:
I think the stock will close the gap after earnings around $195 where the explanation on how the CyberArk acquisition will be in the long term something beneficial, although this stock won't go back soon to its higher $210 price, I will expect a drop in the following days after earnings to around $180.
I'll close my position around $180 Before earnings or around $190 After earnings.
PANW was due to the acquisition of CyberArk and as sympathy fall from FTNT but not because of fundamental reasons or sector/market issues, I used 1 year Fib Retracement to see what would be the worst bottom and best probability bounce taking in consideration that earnings will be very soon (Aug 18) and every short position will be most likely covered before earnings and the stock price taking a more down neutral level to go up or down after earnings.So, considering this risk reward factors, last August 07th, when the stock went down to $166, I bought one Call Option OCT17 175 @7.75 just because this is the first time I trade this stock and it's not very liquid, and theta decay was less than -8, so I decided to place a swing trade and needed an option with low theta decay but maintaining 0.50 Delta.
The next day I say a Big Delta Long Vertical Trade made from a larger investor:
SELL -5,000 PANW 17OCT25 195 @2.82
BUY +5,000 PANW17OCT25 180 @6.45
That gave me more patience to wait for the bounce because the stock wasn't having the hard bounce I expected right away but someone invested almost 2 millions in this trade, which can be confirmed as Open Interest in the options chain.
Because this company has slightly beaten earnings expectations in the last quarters, and until now, there are no downgrades justifying the current price level:
- UBS maintains Neutral at $185 lowering the PT from $200
- Piper Sandler Upgraded PT from $200 to $225
- And almost all ratings from the last months were in the bullish side.
I think the stock will close the gap after earnings around $195 where the explanation on how the CyberArk acquisition will be in the long term something beneficial, although this stock won't go back soon to its higher $210 price, I will expect a drop in the following days after earnings to around $180.
I'll close my position around $180 Before earnings or around $190 After earnings.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.