Yesterday, we started an exploration of stocks in the cybersecurity sector of the technology industry. We started out by examining the options of Cisco Systems and the options contract that I recommended at an asking price of $1.29 opened with a $1.38 asking price today.
Today, we will explore the options of Symantec Corporation (NASDAQ:SYMC). Symantec with its market capitalization of $17.18B is a security, backup and availability solutions company. The Company’s products and services protect people and information in any digital environment from the smallest mobile device, to the enterprise data center, to cloud-based systems. Symantec is a pureplay cybersecurity company and a bullish play on SYMC call options has great chances of being profitable as you will see below.
Impressive Stock Performance
The chart above tracks how the shares of Symantec have traded in the last one year. You will observe that the stock climbed a steep incline to an impressive 52.11% from its 52-Week low of $17.95 in April 2014, to a 52-Week high of $27.32 towards the end of January 2015.
You will observe that the shares of Symantec have a rising support level from $18 through $24 between the months of April and September 2014 before it established a channeling support at $24.50 over the last four months. In addition, the stock has had a $27.50 resistance in the last four months to complete the channel.
When stocks channel, the channeling is usually caused by a lack of good/bad news that could cause them to rise or fall beyond the channel. However, stocks tend to break the channel at a point and they usually head back in the direction that they were before the channeling began. Hence, we can reasonably expect Symantec to break out above the channel and head back to a bullish ascent.
A Strengthening of Security Offerings
Earlier last month, Symantec announced the acquisition of Boeing’s Cyber Security unit as part of plans to boost its cybersecurity offerings. Based on the acquisition deal, Symantec will purchase technology rights from Boeing’s cybersecurity, Narus Inc. and hire the services of 65 engineers and data scientists from Narus security division.
Narus, which Boeing acquired in 2010 has a specialty in providing internet-filtering software for intelligence agencies and the U.S. government. The Narus acquisition will help Symantec in its big data analytics to prevent, detect and thwart cyberattacks among other things.
It might interest you to know that Symantec generates about 62% of its total revenues from its information security unit. In fact, the company generates 43% revenue from consumer information security via its Norton Antivirus software among other things. In addition, the remaining 19% comes from enterprise information security.
Interestingly, the revenue from Symantec’s information security business has been declining in recent quarters as the company lagged in keeping up with the dynamic nature of cyberthreats. However, the Narus acquisition will get the company back on track and we can expect revenues and margins to improve henceforth.
How to Trade SYMC Options
I am optimistic about the prospects of Symantec and I expect the uptrend in the stock to continue. For one, the company has consistently delivered impressively by beating earnings in the last five quarters. In addition, an RSI of 43.54 shows that the stock is not yet overbought. I recommend that you buy the SYMC Apr 2015 25.000 call (SYMC150417C00025000) at an asking price of $0.85.
— Daily Option Alerts