Fiverr International Ltd. (FVRR), Trending Stock Report

Fiverr International Ltd. (FVRR) appeared on our list of compressed stocks this morning. FVRR is an online business that lets freelance workers sell their creative services. FVRR even offers AI services. A recent Zacks Equity Research article dated Aug. 7^th mentioned that the mean estimate of Wall Street analysts is a 34.8% upside move. That is a much larger move than we need for our favorite neutral option strategy to get into profitable territory.

It is interesting that the stock is compressed when market volatility is currently high. On top of that, the options are relatively cheap after a post-earnings volatility crush.

You can see in the chart below that when the stock has been this compressed in the past, it tends to make a big move in the next few weeks. Interestingly, each of those big moves was to the downside, which is contradictory to the expectations of the analysts.

This Volatility Term Structure for FVRR shows us the implied volatility of the at-the-money options for each expiration. To learn more about Volatility Term Structure, click here. Ever-higher volatility expectations as you go further out the calendar are normal shortly after earnings are released. The highest point in the term structure is below 58 and the lowest is above 48. We’re going to select the September 20^th expiration because it gives us time for the stock to move.

This MDM graph compares the modeled expectations of current options prices (the orange line) to the actual movement of FVRR’s stock price over the past two years. You can see that the actual behavior (the blue histogram) shows us that FVRR made big moves more frequently than modeled options prices currently expect. That is good news for our option buying strategies.

This Volatility Cone for FVRR shows us that volatility expectations (the yellow dots) for every term are below the two-year historical volatility average. To learn more about the Volatility Cone, click here. This confirms that options on FVRR are relatively inexpensive.

FVRR’s stock prices are compressed. That is very interesting when market volatility is so high. When the stock has been this compressed in the past, the stock tends to make a bigger-than-expected move within the next few weeks. That is an option buying opportunity.

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