Roku, Inc. (ROKU), Trending Stock Report

Roku, Inc. (ROKU) is trending in the news after two brokerage firm analysts upgraded the stock. The analyst at JPM raised his target for the stock to $90. The analyst at Needham Research raised his target to $100. Recently, the analyst at Wolfe Research upgraded the stock to “Outperform.”

In the chart on the left, you can see that Nielson is showing how streaming platforms are getting the majority of the market share. Tubi, Roku and Pluto are free streaming platforms. ROKU Is catching up to the leader Tubi in the Free Streaming category. Roku may be gaining due to growth in popularity of its TV operating system, according to Wolfe Research.

This Volatility Term Structure chart for ROKU shows us the implied volatility for the at-the-money options for each expiration. This chart shows that options expiring on October 18^th have low volatility expectations. Low volatility expectations means low options prices. This monthly expiration term also has good liquidity and that increases our chances of getting filled at a good price.

This MDM graph compares the modeled expected distribution for future stock prices (the orange line) with the actual distribution of ROKU’s share prices over the past 2 years (the blue histogram). You can see that the actual stock movement shows that the stock tends to make bigger moves than current options prices expect.

This Volatility Cone chart for ROKU compares implied volatility expectations for each term to the historical volatility for that same term. The blue line shows the average historical volatility, the purple lines show each HV measure’s highest high and the lowest low over the past 2 years. You can see that the one-month term (which is the term we are interested in) is below the 2-year historical average. This confirms that the options for that term are relatively inexpensive.

ROKU is trending in the news after multiple analysts upgraded the stock. Options for the October 18^th expiration are relatively cheap with good liquidity. This is an option buying situation.

To get the specific details and prices on today’s trade ideas, be sure to read today’s ODDS Online Daily Option Trade Idea.