Okta Inc. (OKTA)

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Okta Inc (OKTA) Jumps on Upgrade Following Analyst Meeting
By: Schaeffer's Investment Research | April 9, 2021

• BTIG upgraded the stock to "buy" from "neutral"

• However, there is still plenty of pessimism left to be unwound

The shares of Okta Inc (NASDAQ:OKTA) have erased their premarket gains to trade down 0.4% at $237.54 this morning, even after BTIG upgraded the stock to "buy" from "neutral." This positive price action has OKTA extending yesterday's surge, which followed a meeting with analysts in which the company reiterated its guidance for the year and introduced two new products.

OKTA has moved much lower since its Feb. 12 record high of $294, mostly thanks to a steep early March losing streak. Yesterday's pop had the equity breaking out above close pressure at the 30-day moving average, however, the $240 level, which rejected the security's rally attempt last month, could be emerging as a new ceiling on the charts.

Coming into today, the brokerage bunch was already leaning slightly bullish on Okta stock, though there is plenty of room for further upgrades. Nine of the 15 analysts in coverage carried a "buy" or better rating, and the remaining six a tepid "hold." Plus, the 12-month consensus price target of $268.24 is a 12.5% premium to current levels.

Meanwhile, shorts are piling on, with short interest up 34.6% during the most recent reporting period to represent 5.4% of the stock's available float. In other words, it would take over three days to buy back these bearish bets at OKTA's average pace of trading.

Over in the options pits, 1.09 puts have been bought for every call in the last 50 days at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 90% of all other readings from the past year, indicating a stronger-than-usual penchant for puts over the past 10 weeks.

Lastly, now looks like a good time to weigh in on the security's next move with options. The stock's Schaeffer's Volatility Index (SVI) of 43% stands higher than 13% of readings in its annual range, implying that options players are pricing in low volatility expectations at the moment.

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