Datadog earnings triple play has the software stock back on track
Datadog Inc (NASDAQ:DDOG) is up 4.2% to trade at $112.55, after the company’s better-than-expected second-quarter earnings and revenue. The cloud name also lifted its full-year forecast due to strong cybersecurity demand.
The tech sector slump, especially after the global IT outage, weighed on the the stock in July and this month. However, DDOG is on track for its third-straight win, bouncing off the $100 level after four consecutive weekly losses. Year to date, Datadog stock is down 7.6%.
Unsurprisingly, the security is seeing triple the options volume typically seen at this point, with 13,000 calls and 11,000 puts exchanged so far. The September 97.50 put is the most active contract, with new positions being sold to open there. Puts have been growing in popularity for some time now. At the International Securities Exchange (ISE), Cboe Volatility Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), DDOG’s 50-day put/call volume ratio of 1.33 sits higher than 86% of readings from the past year.
A premium-selling strategy could be the move. DDOG sports a Schaeffer’s Volatility Scorecard (SVS) of 17 out of 100, which means the equity has consistently realized lower volatility than its options have priced in.