Why Zendesk May Be Headed For A Big Breakout

On CNBC's "Options Action," Tony Zhang said that one institutional customer “seems to be picking a bottom” for Zendesk Inc ZEN stock, which has lost nearly 40% from its 2021 peak.

Zendesk traded almost 9 times its average daily volume on Wednesday, Zhang mentioned. There was a buyer of 9,044 contracts, which represented over 60% of the total volumes traded Wednesday, he added.

The single institutional investor purchased the February/March 115/125 call diagonals, at an average price of $2.75 per contract, Zhang said. The trader is betting around $2.4 million that Zendesk will climb as much as 18% by March expiration.

ZEN Price Action: Shares of Zendesk declined by 5.27% to close Wednesday’s trading at $96.87.