Entry Opportunity Could Prove Profitable for Tech Bulls

Tech giant Cloudflare Inc (NYSE:NET) pulled back and bounced near its earlier all-time high breakout and 20-day moving average. Now the equity is heading into the weekend above open interest (OI) balance at the 190-strike and peak call level, and could run call stack towards the 220-strike by July expiration. In other words, this gives NET a decent chance to hit our targets.
 

 
Looking toward the options pits, an unwinding of bearish sentiment could trigger tailwinds. NET's 50-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks higher than 72% of readings from the past year.
 
Options are affordably priced, per the stock's Schaeffer's Volatility Index (SVI) of 43% that ranks in the 14th percentile of its annual range, implying that options players are pricing in lower-than-usual volatility expectations. Plus, the security's Schaeffer's Volatility Scorecard (SVS) sits at 80 out of 100, meaning it has tended to exceed volatility expectations during the past year.

 

Our recommended call has a leverage ratio of 5.2 and will double in value on a 21.6% pop in the underlying equity.