Atlassian Surges 2.64%—What’s Fueling the Bullish Rally?

Summary
• Atlassian (TEAM) surges 2.64% intraday to $203.68
• Intraday range: $197.12 (low) to $205.35 (high)
• Turnover: 1.49 million shares, 0.92% of float
• Dynamic PE ratio: -172.26, signaling valuation divergence

Atlassian’s stock has staged a sharp rebound, surging nearly 3% in a volatile session amid conflicting narratives of undervaluation and strategic AI integration. The rally follows months of a 20% annual decline, driven by intrinsic value analyses suggesting a $261.14 fair price. Technical indicators and options activity hint at a short-term reversal as investors weigh bearish guidance against bullish growth expectations.

Undervaluation Thesis and AI-Driven Growth Spark Rally
The intraday surge stems from a tug-of-war between divergent narratives. On one hand, Simply Wall St’s analysis underscores TEAM’s undervaluation, citing a $261.14 intrinsic value against the current $198.44 closing price. On the other, Atlassian’s bundling of its AI assistant Rovo into premium subscriptions, despite margin pressures, has reignited growth optimism. The stock’s 2.64% gain reflects a short-term rebound from a 20% annual decline, as investors balance concerns over insider selling and soft guidance with the company’s 95% projected profit growth.

Software Sector Mixed as Microsoft (MSFT) Trails Slightly
The broader software sector remains mixed, with Microsoft (MSFT) trailing slightly at a 0.02% intraday gain. While Atlassian’s AI integration and valuation debate drive its rally, Microsoft’s stable beta and established market position keep it as a sector benchmark. Atlassian’s forward P/S ratio of 8.3X, compared to the industry average of 6.3X, highlights its stretched valuation amid competitive pressures from Microsoft and ServiceNow.

Options Playbook: Leveraging Theta and Gamma for Short-Term Gains
• 200-day MA: 231.28 (below current price)
• RSI: 43.30 (oversold territory)
• MACD: -3.35, Signal: -2.80 (bearish divergence)
• Bollinger Bands: 180.68 (lower), 201.12 (middle), 221.55 (upper)
• Support/Resistance: 30D (197.85–198.53), 200D (205.79–209.05)

Atlassian’s technical profile suggests a short-term bullish setup, with RSI in oversold territory and price testing the 200D MA. Key levels to watch include the 200D support at $205.79 and resistance at $209.05. The options chain reveals two high-conviction plays:

• TEAM20250801C200
- Type: Call
- Strike: $200
- Expiry: 2025-08-01
- IV: 45.06% (moderate)
- LVR: 23.77% (high leverage)
- Delta: 0.634 (moderate sensitivity)
- Theta: -0.813 (high time decay)
- Gamma: 0.0247 (high sensitivity to price swings)
- Turnover: $47,620 (liquid)
- Payoff at 5% upside ($214.15): $14.15/share
• TEAM20250801C202.5
- Type: Call
- Strike: $202.5
- Expiry: 2025-08-01
- IV: 37.38% (low-mid)
- LVR: 33.23% (high leverage)
- Delta: 0.579 (moderate sensitivity)
- Theta: -0.735 (high time decay)
- Gamma: 0.0309 (high sensitivity to price swings)
- Turnover: $4,275 (modest liquidity)
- Payoff at 5% upside ($214.15): $11.65/share

Aggressive bulls may consider TEAM20250801C200 into a bounce above $205.79, while TEAM20250801C202.5 targets a 5% upside with high gamma for directional bets.

Backtest Atlassian Stock Performance
The backtest of market performance after a 3% intraday surge indicates that such events have no significant impact on the market in the short term. The maximum return observed was 3.70% on the day of the surge, which is the maximum return during the backtest period, suggesting that while there is some price appreciation, it is not consistently followed by further gains.

Bullish Setup Unfolds—Act Before Expiry
Atlassian’s 2.64% rally signals a potential short-term reversal, supported by oversold RSI and high-gamma options activity. The $205.79–209.05 resistance zone is critical for confirming momentum. Investors should prioritize TEAM20250801C200 for liquidity and leverage, while monitoring Microsoft (MSFT) as the sector leader (-0.02% intraday) for broader software sector cues. Watch for a breakout above $209.05 to validate the bullish thesis before the August 1 expiry.