Investors in Paycom Software, Inc. PAYC should keep a close eye on the stock based on the options market’s moves lately. That’s because the December 20, 2024 $540 Put had some of the highest implied volatility of any stock option today.
Implied volatility shows how much movement the market expects in the future. Options with a high degree of implied volatility suggest that investors in the underlying stock are expecting a big move in one direction or the other. It could also mean that an event is happening soon that could cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.
Clearly, options traders are pricing in a big move for Paycom Software stock, but what’s the fundamental picture for the company? Currently, Paycom Software is a Zacks Rank #3 (Hold) in the Internet Software industry that is in the Top 15% of our Zacks Industry Rank. Over the past 30 days, one analyst has raised earnings estimates for the current quarter, while no analysts have revised their estimates downward. The net effect has taken our Zacks Consensus Estimate for the current quarter from $1.98 per share to $1.99 in that period.
Given the way analysts currently feel about Paycom Software, this huge implied volatility could mean a trade is developing. Often options traders look for options with a high degree of implied volatility to sell premium. This is a strategy that many seasoned traders use because it catches decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.
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Paycom Software, Inc. (PAYC): Free Stock Analysis Report
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