Each week, I’ll give an overview of a stock and Licia Leslie will follow that up with a chart analysis the next day. Bill Griffo will chime in with macro analysis and Andrew Giovinazzi will then finish out the week with a volatility breakdown.

Have a stock YOU want us to review? Email my team here. – Mark

Zoom Video Communications Inc (Ticker: ZM) is on tap this week. ZM was the poster child during the COVID era when everyone wanted to get in on the free video conferencing software maker.  From a high of over $400, ZM has since dropped into the low 60’s.

It’s like the whole COVID growth engine stopped; it did, but Zoom is still part of the lexicon now.  Everyone has heard of a Zoom Call. Strangely, the other big video conferencing software makers like Microsoft Corp (Ticker: MSFT) and Cisco Systems Inc (Ticker: CSCO) never got the cache that ZM has in that space.

The implied vols are in an interesting spot.

ZM’s IVs Are Very Low

If I zoom in – no pun intended – IVs are at historic lows. That’s usually a good time to buy longer term implied volatility. Note in the circled area that realized vols are ticking up too. The story is no one cares about ZM until it has some AI news.

ZM 30 day IV highlighted 

ZM would make a decent longer term strangle candidate. The stock doesn’t look like it can get much lower considering it’s at pre-COVID prices with 3 years of retained earnings. But the company is very profitable, and traders will find it eventually.

120 day implied volatility in green on the bottom

Longer-term 120 Day IV is very inexpensive, so this isn’t a bad place to play. ZM was $80 in February. ZM Aug18 80 calls are only $1.95 and the $60 puts are $1.30.

As Bob Barker would say, “the price is right!”

To Your Trading Success,

AG