Cybersecurity firm
SentinelOne (S) is up 10% over the past year, and shares just dropped over 10% last week due to underwhelming guidance. One trader sees shares bouncing higher over the next few months.
That’s based on the March 21, 2025 $31 calls. With 102 days until expiration, 6,265 contracts traded compared to a prior open interest of 172, for a 36-fold rise in volume on the trade. The buyer of the calls paid $1.00 to make the bullish bet.
SentinelOne shares recently traded for about $25, so the stock would need to rally by $6, or about 24%, for the option to move in-the-money. The strike price is right near the stock’s 52-week high of $30.76.
A rebound makes sense, given the company’s recent strong earnings, which are now up 33% over the past year. While not fully profitable yet, SentinelOne is trending that way. Plus, the company has a cash-rich balance sheet and low debt levels.
Action to take: Investors may like shares as an oversold play following earnings here, with an eye towards the stock delivering low double-digit returns over the next few months.
For traders, shares are likely to rebound in the coming weeks from their steep selloff last week. The March 21 $31 calls are priced for a high double-digit return on such a move higher.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.