Cybersecurity stocks are surging. One looks promising into earnings

TL;DR

Zscaler is showing signs of a bearish-to-bullish stock reversal.
Options are not cheap due to a high implied move compared to the long-term average.
A call spread risk reversal strategy is proposed to gain bullish exposure with limited premium outlay.
The company boasts strong revenue growth (26% YoY), significant free cash flow margins (~27%), and a clean balance sheet (~$1.7 billion net cash).
Zscaler's Zero Trust Exchange platform is structurally positioned to benefit from the increasing need for AI security.
The AI agent exposure is seen as an under-appreciated catalyst, with every new AI workload requiring inspection and security.
Potential risks include decelerating net retention, hyperscaler competition, macro headwinds, and unmonetized AI features.
The upcoming earnings report is important as the street expects reported profits, and the stock has already recovered significantly on this expectation.

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