As cyber threats continue to escalate globally, CrowdStrike Holdings, Inc. (CRWD) has emerged as a leading cybersecurity firm poised for significant growth. After an outage earlier this year, CrowdStrike’s stock price has lagged for much of 2024, but recent stock price action suggests that CRWD is potentially gearing up to break out. In this analysis, we’ll explore the bullish signals from both technical and fundamental perspectives and outline an optimal options strategy to capitalize on this opportunity—all identified instantly using the OptionsPlay Strategy Center within StockCharts.com.
Examining CRWD’s chart reveals several compelling bullish indicators:
- Recovery above gap level of $335. CRWD has rebounded above the critical gap level of $335, previously affected by a failed release that impacted Microsoft Corp. (MSFT). This recovery signifies a strong reversal in market sentiment.
- Breakout and retest of support. The stock has broken above this important resistance level and successfully retested it as support.
- Momentum towards 52-week highs. With the successful retest, CrowdStrike’s stock price shows signs of potentially retesting its 52-week highs around $400 and breaking out above it.
FIGURE 1. DAILY CHART OF CROWDSTRIKE STOCK PRICE. CRWD has broken above an important resistance level and could retest its 52-week high, potentially even breaking above it.Chart source: StockCharts.com. For educational purposes.
CrowdStrike’s fundamentals further bolster the bullish thesis:
- Robust revenue growth. In its Q2 FY2025 earnings report dated August 30, 2024, CrowdStrike reported revenue of $963.9 million, marking a 32% year-over-year increase.
- Significant ARR increase. The company’s Annual Recurring Revenue (ARR) grew by 32% to $3.86 billion, with $217.6 million added in the quarter.
- Improved profitability. CrowdStrike achieved a net income of $47 million, reflecting enhanced profitability and operational efficiency.
Despite the challenges posed by the outage, CrowdStrike’s strong revenue and ARR growth demonstrate its resilience and robust market demand for its cybersecurity solutions. The company’s focus on innovation and expanding its product offerings positions it well for long-term growth in the competitive cybersecurity landscape.
Options Strategy for CrowdStrike
To capitalize on this bullish outlook, the OptionsPlay Strategy Center suggests selling the January 3, 2025, $370/$340 Put Vertical for a $12.80 credit per share.
Trade Structure of the Put Vertical
- Sell: January 3, 2025, $370 put option at $21.40
- Buy: January 3, 2025, $340 Put Option at $8.60
- Net Credit: $1,280 per contract
FIGURE 2. RISK CURVE AND TRADE DETAILS OF CROWDSTRIKE PUT VERTICAL STRATEGY. The put vertical strategy allows you to profit even if CrowdStrike’s stock price moves sideways.Image source: OptionsPlay Strategy Center in StockCharts.com. For educational purposes.
Trade Details
- Maximum Potential Reward: $1,280
- Maximum Potential Risk: $1,720
- Breakeven Point: $357.20
- Probability of Profit: 56.30%
This bullish strategy, known as a bull put spread, profits if CrowdStrike’s stock price remains above the breakeven point by the expiration date.
This strategy benefits from time decay and allows for profit even if the stock remains stagnant or rises moderately. It provides a favorable risk-to-reward ratio while aligning with the bullish outlook on CrowdStrike.
Unlock Real-Time Trade Ideas
This bullish opportunity in CrowdStrike stock was swiftly identified using the OptionsPlay Strategy Center within StockCharts.com. The platform automatically scanned the market, highlighted CRWD as a strong candidate for continued upward movement, and structured the optimal options trade in real-time (see below).
FIGURE 3. CRWD SCREENED AS BULLISH OUTPERFORMER. By selecting Bullish Outperformance from the Technical Scan dropdown menu and Bull Put Strategy from the Strategy dropdown menu, CRWD was screened as a candidate for further upside.Image source: StockCharts.com. For educational purposes.
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