Zscaler Inc (NASDAQ:ZS) stock has dropped to $241.86, down from a three-year high of $336.99 on Nov. 3. Despite recent losses, the cybersecurity stock is testing a historically bullish trendline, making it a potential buy opportunity on the dip.

According to Schaeffer’s Senior Quantitative Analyst Rocky White, ZS is close to its 320-day moving average and historically has seen gains after reaching this point. This signal has occurred eight times in the past 10 years, with an average gain of 10.5% one month later.

ZS has a 14-day RSI of 13.3, signaling oversold conditions, which could lead to a short-term bounce. Additionally, a shift in sentiment among options traders could provide a boost, as call volume ratios are currently high compared to historical readings over the past year.

Options for ZS are currently affordable, with the Schaeffer’s Volatility Index (SVI) at 39%, indicating low volatility expectations. This post-earnings period presents an opportunity for traders to take advantage of relatively cheap options.

Read more at Yahoo Finance: This Zscaler “Buy the Dip” Signal is Rarely Wrong