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Why Crowdstrike Stock's Pullback Could Be Short-Lived

·2 min read

While the shares of Crowdstrike Holdings Inc (NASDAQ:CRWD) are cooling off after yesterday's attempt to topple the stock's recent Aug. 30 peak at $289.24. The stock was last seen down 0.7% at $283.12, though there's reason to believe CRWD could keep adding to its already impressive 94.5% year-over-year lead, and notch a fresh record high in the process.

According to a study from Schaeffer's Senior Quantitative Analyst Rocky White, CRWD's proximity to its record high comes amid historically low implied volatility (IV). This has been a bullish combination for the security in the past. In fact, White's study illustrates four other times in the past five years when the equity was trading within 2% of its 52-week high, while its Schaeffer's Volatility Index (SVI) stood in the 20th percentile of its annual range or lower. This is currently the case with CRWD's SVI of 36%, which sits in its 3rd annual percentile.

After three of these signals, the equity enjoyed a positive one-month return, averaging an 11.1% pop. A similar move from its current perch would put CRWD at a fresh record of $314.55.

The equity still has plenty of underlying support as well. Last month, we covered the bullish implications of the 80-day moving average, while the 120-day trendline quickly stepped in as a floor for a brief pullback earlier in October.

crwd oct 19
crwd oct 19

Analysts are plenty bullish on Crowdstrike stock. Of the 20 in coverage, 19 consider it a "buy" or better. Plus, the 12-month consensus price target of $310.48 is a 9.2% premium to current levels.

Now looks like the perfect time to speculate on CRWD's next move with options, too. As we mentioned before, Crowdstrike's SVI stands in the extremely low 3rd percentile, indicating that options traders are pricing in relatively low volatility expectations at the moment. What's more, the security's Schaeffer's Volatility Scorecard (SVS) ranks at 85 out of a possible 100. This indicates that the stock tends to outperform these expectations -- a good thing for buyers.