Shopify Stock Could Rally Off Ample Support

Shopify Inc (NASDAQ:SHOP) stock has pulled back from multi-year highs to potential support at the 30-day moving average, which previously acted as resistance in February and March before stepping in as a floor in May. The $139.68 level, which coincides with double the equity’s April lows and is roughly 10% below its post-earnings peak, has also been supportive over the past week. Meanwhile, $137.70 represents an 8,000% return on the security’s initial public offering (IPO) price, which is the post for a 10-for-1 stock split.

 

 
There is still plenty of pessimism surrounding SHOP, leaving ample room for upgrades. In fact, 20 of the 47 analysts in coverage still sport a “hold” or worse rating. Plus, short interest is slowly rolling over from an 18-month high in June, and a decent chunk of overhead calls at the 145- and 155-strikes expired on Friday.
 
Our recommended October call has a leverage ratio of 7.6, and will double on a 13.1% rise in the underlying security.