Market intelligence platform ZoomInfo Technologies (ZI) is down 30% over the past year. One trader sees shares sliding lower in the months ahead.
That’s based on the May $10 puts. With 72 days until expiration, 11,555 contracts traded compared to a prior open interest of 105, for a massive 110-fold rise in volume on the trade. The buyer of the puts paid $0.44 to make the bearish bet.
ZoomInfo shares recently traded for about $11.50, so the stock would need to decline by about $1.50, or about 13%, for the option to move in-the-money. The strike price is still well above ZoomInfo’s 52-week low of $7.65, set last summer.
ZoomInfo has had a poor year, with revenue declining by 2%, and with no earnings growth. Total debt has soared by 82%, and the PE ratio surged from a hefty 54 times earnings to 145 times.
Action to take: With operations lackluster and with the market in defensive mode, further downside in ZoomInfo shares is likely in the coming months. Interested investors should wait until shares have stopped falling to add to their stake.
For traders, the May $10 puts are well positioned for further weakness in the months ahead. If shares start to bottom out, traders may want to take quick profits on the puts rather than try and hold until expiration.
Disclosure: The author of this article has no position in the company mentioned here, but may further trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.