Advertisement
Singapore markets close in 5 hours 52 minutes

  • Straits Times Index

    3,184.92
    +30.23 (+0.96%)
     

  • Nikkei

    38,090.87
    +129.07 (+0.34%)
     

  • Hang Seng

    16,489.31
    +237.47 (+1.46%)
     

  • FTSE 100

    7,847.99
    +27.63 (+0.35%)
     

  • Bitcoin USD

    62,072.79
    -1,881.73 (-2.94%)
     

  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     

  • S&P 500

    5,022.21
    -29.20 (-0.58%)
     

  • Dow

    37,753.31
    -45.66 (-0.12%)
     

  • Nasdaq

    15,683.37
    -181.88 (-1.15%)
     

  • Gold

    2,387.70
    -0.70 (-0.03%)
     

  • Crude Oil

    82.87
    +0.18 (+0.22%)
     

  • 10-Yr Bond

    4.5850
    -0.0740 (-1.59%)
     

  • FTSE Bursa Malaysia

    1,539.97
    -0.45 (-0.03%)
     

  • Jakarta Composite Index

    7,149.20
    +18.36 (+0.26%)
     

  • PSE Index

    6,543.76
    +93.72 (+1.45%)
     

Implied Volatility Surging for Roku (ROKU) Stock Options

Zacks Equity Research

Investors in Roku, Inc. ROKU need to pay close attention to the stock based on moves in the options market lately. That is because the May 31, 2019 $80.00 Put had some of the highest implied volatility of all equity options today.

What is Implied Volatility?

Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.

What do the Analysts Think?

Clearly, options traders are pricing in a big move for Roku shares, but what is the fundamental picture for the company? Currently, Roku is a Zacks Rank #1 (Strong Buy) in the Broadcast Radio and Television industry that ranks in the Top 29% of our Zacks Industry Rank. Over the last 60 days, four analysts have increased their earnings estimates for the current quarter, while one has dropped the estimate. The net effect has taken our Zacks Consensus Estimate for the current quarter from a loss of 23 cents per share to a loss of 21 cents per share in that period.

ADVERTISEMENT

Given the way analysts feel about Roku right now, this huge implied volatility could mean there’s a trade developing. Oftentimes, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.

Looking to Trade Options?

Each week, our very own Dave Bartosiak gives his top options trades. Check out his recent live analysis and options trade for the NFLX earnings report completely free. See it here: Bartosiak: Trading Netflix's (NFLX) Earnings with Options or check out the embedded video below for more details:


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Roku, Inc. (ROKU) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research