Don't Bet on a Roku Stock Rally Just Yet

Roku Inc (NASDAQ:ROKU) stock is down 33.6% so far in 2024. The shares have yet to recover from February bear gap and have even moved lower since. Still, bulls should hold off on buying in on the dip, as ROKU could move lower still. 

That's because the security just came within one standard deviation of its 50-day moving average, after a lengthy period below the trendline, defined for this study as having traded south of this trendline 80% of the time over the last two months, and in eight of the last 10 trading days.

Per data from Schaeffer's Senior Quantitative Analyst Rocky White, Roku stock saw seven similar occurrences over the past three years. The equity was lower one month later in 57% of those instances, averaging a 7.9% drop. A similar drop from its current perch of $60.73 would put ROKU right around the $55 mark, on the lower rung of its recent consolidation channel.

An unwinding of optimism could also weigh on the security. According to data at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ROKU's 50-day call/put volume ratio of 2.32 ranks higher than all other readings from the past year. 

For those looking to speculate on Roku stock's next move, options could be the way to go. The security's Schaeffer's Volatility Index (SVI) of 43% sits higher than 100% of readings from the past year. In other words, options traders are pricing in relatively low volatility expectations right now.