The shares of Zynga Inc (NASDAQ:ZNGA) are up 0.8% to trade at $10.40 at last check. Despite a Feb. 19 six-year high of $12.32, the stock has carved out a channel of lower highs to the tune of a 11% deficit the last three months. The good news is this pullback has put ZNGA within reach of a trendline that has served as a reliable bullish signal in the past.
More specifically, the equity just came within one standard deviation of this 200-day moving average, after spending several months above it. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, five similar signals have occurred in the past three years. Zynga stock enjoyed a positive return one month later in 75% of those cases, averaging a 3% gain. From its current perch, a comparable move would put ZNGA close to the $11 level.
Puts have been more popular than usual, lately. This is per ZNGA's 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 73rd percentile of its annual range.
What's more, Zynga stock premiums are a bargain at the moment, making now an ideal time to weigh in on the stock's next move with options. The security's Schaeffer's Volatility Index (SVI) of 37% sits in just the 9th percentile of its annual range, indicating options players are pricing in low volatility expectations right now.