FireEye Stock at Critical Juncture

Shares of cybersecurity concern FireEye (FEYE) have been in a channel of higher lows since the start of the year, advancing almost 5% year-to-date. However, FEYE is struggling to overcome its year-over-year breakeven mark, as well as its 80-day moving average. What’s more, the equity just flashed a historic bear signal, suggesting FEYE could retreat once again soon.

Specifically, the stock is back within one standard deviation of its 200-day moving average, after a lengthy stretch below this trendline. Over the past three years, there have been four similar run-ups to the 200-day, and FEYE was lower one month later three of those times, averaging a loss of more than 7%. A similar pullback from the stock’s current perch would place it around $15.76 — and in the red for 2019.

Although FEYE is facing some potential hurdles on the charts, options traders have rarely been more bullish toward the stock. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open nearly 37 FEYE calls for every put in the past two weeks. The 10-day call/put volume ratio of 36.8 is higher than 99% of all other readings from the past year.

Echoing that, FEYE sports a Schaeffer’s put/call open interest ratio (SOIR) of 0.24, indicating that call open interest more than quadruples put open interest among options expiring in the next three months. The SOIR is at the bottom of its annual range, suggesting near-term traders haven’t been this call-heavy in the past 12 months

The overhead April 17 and 18 strikes are home to roughly 3,900 and 5,200 calls outstanding, while the April 20 and 21 strikes harbor more than 10,000 calls apiece. This abundance of bullish bets overhead could translate into an added layer of options-related resistance for FEYE in the short term.