Best Stocks to Own: Workday Stock Could Add 8% in August

Workday (WDAY) is trading at $226.12, up 0.4% and holding familiar support at $220, despite a 12.5% year-to-date deficit. The stock shows strong August seasonality, historically averaging an 8% gain and ending the month higher 80% of the time over the past decade, potentially pushing shares above $244. This seasonal tailwind is complemented by a high Schaeffer's put/call open interest ratio (1.75, 97th percentile), indicating significant short-term options trader pessimism that could unwind, while options premiums remain affordably priced (SVI 29%, 12th percentile).

Analysis

Workday, Inc. (WDAY) is exhibiting a constructive technical and seasonal setup despite a 12.5% year-to-date deficit. The stock is holding firm support at the $220 level after a recent rejection at its 100-day moving average. A significant potential catalyst is the stock's strong historical performance in August, where it has averaged an 8% gain and finished the month higher 80% of the time over the past decade; a similar move would project a price above $244. This bullish seasonal trend is complemented by contrarian sentiment indicators from the options market. The Schaeffer's put/call open interest ratio (SOIR) of 1.75 is in the 97th percentile of its annual range, indicating unusually high pessimism among short-term traders, which could fuel a rally if this sentiment unwinds. Furthermore, with the Schaeffer's Volatility Index (SVI) at a low 29% (12th percentile of its annual range), options premiums are currently priced affordably, presenting a favorable environment for positioning.

Key Decisions for Investors

• Given the compelling historical seasonality for August and contrarian options sentiment, investors could consider initiating tactical long positions, with a potential price target near $244.
• The low implied volatility, indicated by an SVI in the 12th percentile, suggests that using call options could be a cost-effective strategy to gain upside exposure while defining risk.
• It is crucial to monitor the $220 support level; a sustained break below this price would invalidate the immediate bullish technical thesis and signal potential for further downside.
• Investors should recognize that this trade thesis is heavily dependent on a seasonal pattern, which is not guaranteed to repeat, and manage the position's timeframe accordingly.