TL;DR – Headline Signal
- Okta is likely to beat Street EPS and revenue again for Q3 FY26.
- The base case is for effectively inline guidance, with careful macro language rather than an aggressive raise.
- The front-week ATM straddle into 12/05 implies roughly an ±11–12% move off an ~$82 stock, with front-week IV around 160% versus ~95% for the following week.
- The expected realized move looks more like +5–8%, skewed up, as long as guidance is steady and CRPO holds up.
In directional terms: beat on the quarter, upward reaction around +7% on average, and guidance that’s broadly inline, with directional confidence of roughly 0.61 that the initial gap is to the upside rather than down.
Setup – What the Street Expects
Okta reports Q3 FY26 (quarter ended Oct 31, 2025) after the close on Tuesday, Dec 2, 2025.
Recent previews point to:
- Consensus non-GAAP EPS: roughly $0.75–0.76
- Consensus revenue: about $729–730M, roughly 10% year-over-year growth, a step down from the low-teens growth pace Okta has been running at.
Recent history includes:
- Multiple quarters with clean beats on both EPS and revenue, including a recent quarter where revenue landed around the high-$600M range versus consensus in the high-$600s and EPS also came in ahead.
- A pattern where the stock has sometimes sold off despite beats when management refused to push full-year guidance higher given macro and demand uncertainty.
So the bar on the headline numbers is moderate but not low. The market is heavily focused on:
- CRPO and pipeline, especially public sector strength
- Net retention and seat expansion trends
- Tone of FY26 and early FY27 commentary, particularly around durable growth in identity and security spend
Fundamentals & Recent Performance
Based on recent fundamentals:
- Market cap: roughly $14B+
- Revenue growth TTM: low double digits, around 12–13%
- Gross margin TTM: about 77%, still very healthy for a software security name
- Net margin TTM: mid-single digits, around 6%
- P/S: roughly 6x, P/E TTM: high double digits
- ROE / ROA: low single digits, consistent with a business that has only recently shifted firmly into sustained profitability
At $82.09, shares are:
- Roughly a third below a recent 52-week high in the upper-$120s
- Not far above a recent 52-week low in the mid- to high-$70s
In other words:
- Okta has moved into real, repeatable profitability on an adjusted basis.
- Revenue growth is decelerating but still solid double digits.
- The stock trades at quality-growth multiples, not peak-era SaaS froth.
- The valuation has already been de-rated versus earlier in the cycle.
Recent quarters have told a consistent story:
- One print delivered revenue and CRPO upside with margin expansion, leading to a double-digit pop as investors embraced the profitable-growth pivot.
- Another featured beats on EPS and revenue but triggered a sharp pullback when management chose to keep full-year guidance conservative rather than chase aggressive expectations.
Net-net, the fundamental story is intact, but the stock now trades in a regime where investors want reassurance on durability of growth and pipeline more than just another EPS beat.
Options & Tape Diagnostics
All of the numbers below are based on a near-real-time options snapshot around 2025-12-02T19:33:21Z, with OKTA at $82.09.
1. Implied move into earnings
Front-week activity centers on 2025-12-05 (3 DTE):
- Front expiry: 2025-12-05
- Front-week ATM strike: $82
- Approximate ATM call mid: ~$4.90
- Approximate ATM put mid: ~$4.83
- 3-day ATM straddle cost: ≈ $9.73
On an $82 stock, that implies about a ±11.8–12.0% move through Friday.
Across expiries:
- 2025-12-05 (3D): IV ~161%, straddle ≈ 11.8% of spot
- 2025-12-12 (10D): IV ~94%
- 2025-12-19 (17D): IV ~76%
- Longer-dated expiries (2027–2028) step down into the high-30s for ATM IV
This is a classic earnings event vol hump: very elevated IV in the front week, with a sharp step-down immediately afterward.
2. Put/call balance by expiry
Aggregated positioning looks like:
-
Front week (12/05):
- Call open interest ≈ 8.4k, put open interest ≈ 8.1k → balanced OI
- Call volume ≈ 13.4k, put volume ≈ 14.0k → slightly put-heavy flow into the event
-
December monthly (12/19):
- Call open interest ≈ 15.8k vs put open interest ≈ 3.7k → strong call-dominant OI post-earnings
- Volume also skewed toward calls
Across the whole chain, total call OI sits somewhat above total put OI and call volume is modestly higher than put volume, which is consistent with cautiously constructive positioning.
The pattern:
- Near-term traders are hedging both tails, with a slight short-term tilt toward protection.
- Post-earnings positioning leans more clearly bullish, with long calls and call spreads favored further out in December.
3. Strike distribution & “walls”
Around the money (roughly 70–95 strikes in the front week):
-
Downside put interest:
- Heavy concentration in 70–75 puts, with sizable open interest and volume.
- This cluster looks like a soft floor, where funds that own the stock or sector are hedging downside into the event.
-
Upside call interest:
- Elevated call open interest and volume around 90–95 calls, sitting roughly +10–15% above spot, near the upper edge of the implied move band.
In the short list of notable flows:
- Dec 5th 85 calls trade in size as direct upside speculation close to the money.
- Dec 5th 70 puts also see large blocks, typical of crash hedges or speculative downside lottos.
Taken together, the tape looks like a market that expects a big move but is not sure on direction, rather than one leaning aggressively to a single outcome.
4. Term structure & skew
- Term structure: Very steep from 3D (≈161% IV) down to 10D (~95%) and 17D (~76%), then flattening into the 50s and 40s further out. It’s a textbook isolated earnings event.
- Skew / wings: In the near expiry, call and put IV are almost symmetric at the ATM and across nearby strikes. There’s no extreme crash skew or melt-up skew—both wings are expensive, reflecting the double-digit move the market is braced for and Okta’s history of large earnings gaps.
The overall options message:
- Volatility is priced rich into this print.
- Positioning is balanced but cautious, with protection in the front week and bullish structures dominating later in December.
- The implied move (~±12%) sits toward the higher end of Okta’s typical earnings reactions, but not out of line given past 20%+ gaps.
This backdrop supports a thesis of beat and smaller-than-implied move, rather than a view that traders are underpricing risk.
Sentiment – News, Analysts, Social
Street & news flow
Recent coverage highlights a few key themes:
-
Execution has improved:
- Okta’s recent results have shown mid-teens revenue growth, CRPO upside, and expanding margins. The market generally likes the pivot toward profitable growth and a more disciplined go-to-market motion.
-
Guidance anxiety persists:
- There have been quarters where the stock fell sharply despite a beat because management refused to chase aggressive full-year guidance, citing macro uncertainty and net retention headwinds. Guidance tone now often matters more than the headline beat.
-
Analyst stance into Q3 FY26:
- Many analysts still rate Okta a Buy/Overweight, with price targets meaningfully above the low-$80s spot level.
- Recent preview notes talk about “revamped expectations”, but the adjustments look more like fine-tuning than a wholesale shift in the thesis.
- The focus list for this quarter features CRPO, public sector wins, security deal sizes, and durability of identity demand.
Overall, institutional tone is cautiously optimistic: investors respect the improvements in profitability, but are not eager to pay up unless they get visibility into sustainable double-digit growth.
Social & retail chatter
On the retail and social side:
- Community spaces like Reddit and StockTwits are active, but not in full meme mode.
- Comments are split between “OKTA is going to dump” memes and more constructive takes pointing to the chart, support in the low-80s, and improving fundamentals.
- Short-term traders are very focused on the implied move and the potential for another outsized gap, given prior 20%+ earnings reactions.
This mix of bearish memes, dip-buyers near support, and a non-trivial options event premium suggests that positioning is far from universally bullish or bearish—which is exactly what shows up in the tape.
Guidance Scenarios
With guidance effectively expected to be inline, the range of outcomes hinges on CRPO, retention, and tone.
Base Case – “Inline but Reassuring” (most likely)
- Revenue and EPS beat consensus by a modest amount.
- CRPO prints solidly, in line with or slightly above expectations.
- Management reaffirms or nudges full-year ranges higher but retains conservative macro language.
- Net retention is under pressure but not collapsing; commentary highlights public sector and larger enterprise deals as offsets.
In this scenario:
- The market gets enough reassurance to reward the stock.
- With a ±12% move implied, the actual reaction is likely up mid- to high-single digits, consistent with a +5–8% central case.
Bull Case – “Beat and Raise with Confidence”
- EPS beats convincingly and revenue/CRPO come in clearly ahead.
- Management raises FY26 guidance, articulates a cleaner pipeline and improved visibility into FY27.
- Commentary leans into AI-related identity use cases and platform wins.
This opens the door to a double-digit upside move, potentially matching or even exceeding the implied move if investors see it as a step-up to a structurally stronger growth and earnings path.
Bear Case – “Beat but Wobbly Guide or CRPO”
- Headline revenue and EPS are fine, but:
- CRPO misses or decelerates more than expected, or
- Full-year guidance is tightened or shaded lower, or
- Commentary around macro, seat expansion, or competition (especially from larger platforms) turns noticeably more cautious.
Here, the stock can easily trade down by the full implied move—or more—if investors start to question the durability of identity-driven growth.
Trade Framework (Not Investment Advice)
These are examples of how some traders might align structures with the options surface and the directional view described above, not personalized recommendations.
1. Short Event Vol with a Wide Iron Condor
View: Implied move (~12%) looks rich versus an expected move closer to ~7%.
Conceptual structure:
- Sell 12/05 70 puts and 95 calls (strikes outside roughly ±15% from spot).
- Buy 12/05 65 puts and 100 calls to define risk.
This kind of wide iron condor:
- Sells very expensive event-week IV,
- Wins if OKTA finishes the week between roughly –15% and +15%,
- Aligns with a belief that realized volatility will undershoot what’s priced.
Risk: a guidance shock, major security headline, or unexpectedly aggressive move in either direction could still tag the wings, so sizing and risk limits matter.
2. Post-Earnings Bullish Call Spread
View: Constructive on direction, but prefer to avoid paying peak event vol.
Idea:
- Use the 12/19 monthly expiry, where IV is already much lower than front week.
- For example, buy a 12/19 80/95 call spread:
- 80 is just below spot,
- 95 sits near a notable call interest cluster and towards the upper part of the implied move band.
This:
- Provides directional upside if Okta grinds higher over the next couple of weeks,
- Caps risk while taking advantage of post-earnings call-heavy positioning.
3. Diagonal: Sell the Event, Own the Story
View: Longer-term constructive on Okta, but think event vol is overpriced.
Concept:
- Buy a slightly ITM call in a later expiry (e.g., 12/19 80c).
- Sell a near-the-money 12/05 call (e.g., 12/05 85c) against it.
The goal:
- Use the short front-week call to harvest rich event IV,
- Maintain longer-dated upside exposure via the back-month call,
- Benefit if Okta pops modestly but doesn’t blow through the short strike in a single session.
Traders using this type of structure need to be comfortable managing assignment risk and the possibility of a gap beyond the short strike.
Risks & What Could Break the Thesis
Key ways this call can fail:
-
Guidance or CRPO Disappointment
If CRPO growth slows more than expected, full-year guidance is cut or materially underwhelms implicit expectations, or commentary around demand turns sharply cautious, the stock can easily move down by the full implied ~12% or more, regardless of an EPS beat. -
Security or Reputation Shock
Any major new security incident, breach-related headline, or visible surge in churn from a past incident could overwhelm the quarter’s numbers and reset the valuation lower. -
Crowded Positioning Under the Surface
If large funds are more heavily long than the open interest suggests, even a decent beat and steady guide might trigger “sell the news” price action, flipping the reaction from up to down. -
Misjudged Vol vs. Move
If investors collectively decide this is a regime shift quarter—either positively or negatively—the stock can post another 20%+ gap, making a smaller expected move look far too conservative.
If the call reveals:
- CRPO or net retention deteriorating faster than expected,
- Guidance re-anchored lower without a credible path back to mid-teens growth, or
- Evidence that competitive or macro pressures are biting harder than previously disclosed,
then the setup shifts from “beat with modest upside” toward a slower-growth, lower-multiple identity story where downside scenarios dominate.
For now, the combination of:
- A long beat streak,
- A respectable but decelerating growth profile,
- Elevated but not absurd implied volatility, and
- Options and sentiment positioning that looks cautious but constructive,
supports a call for another beat, a modest upside reaction, and guidance that’s effectively inline but not alarming.