Roku (ROKU) stock has experienced a difficult year, with a 36.8% decline in 2024. The security has been hovering near its six-month lows, but has found some support around the $56 level in recent weeks. However, analysts are cautioning against buying the dip at this time, as the stock may face more turbulence in the coming weeks. The stock recently approached its 50-day moving average, a level it has not touched for some time. Historical data shows that in similar instances over the past three years, the stock was lower one month later in 43% of cases, with an average drop of 7.9%.
Despite the recent struggles, the overall outlook for Roku stock appears bullish. The 50-day call/put volume ratio is currently at 2.24, ranking higher than 98% of readings from the past year. Similarly, the Schaeffer’s put/call open interest ratio (SOIR) of 0.65 indicates a call-bias among short-term premium traders, ranking lower than 88% of annual readings. This level of optimism could potentially put upward pressure on the stock, but any unwinding of this sentiment could have a negative impact on its performance.
Options trading could be a viable strategy for those looking to speculate on Roku stock’s future movements. The stock’s Schaeffer’s Volatility Index (SVI) of 52% is higher than just 9% of readings from the past year, suggesting that options traders are pricing in relatively low volatility expectations at the moment. Furthermore, the Schaeffer’s Volatility Scorecard (SVS) of 72 out of 100 indicates that the stock has regularly made larger moves than what options traders were anticipating over the last year. This could present opportunities for traders looking to capitalize on potential price movements.
In light of these indicators, investors should exercise caution when considering Roku stock. While the stock has shown some resilience around the $56 level, the potential for further downside cannot be ignored. The upcoming weeks may bring more volatility and uncertainty, making it prudent for investors to wait for a clearer trend to emerge before deciding on their next move. In the meantime, keeping an eye on key technical levels and monitoring options activity could provide valuable insights into the stock’s future trajectory.
