Cloudflare (NET) Surges 3.25% Intraday: What’s Fueling the Rally?

Summary
• Cloudflare (NET) surges 3.25% to $204.45, hitting a $204.62 intraday high after a $197.77 low
• Institutional ownership hits 82.68%, with Norges Bank and Vanguard adding $541M and $6.17B positions
• Analysts rate the stock a 'Moderate Buy' with a $233.70 target, but insider selling of $124.6M raises questions
Cloudflare’s intraday rally reflects a mix of institutional confidence and analyst optimism, despite insider selling. The stock’s 3.25% surge to $204.45—its highest since late 2025—has outperformed the broader cybersecurity sector. With Q3 revenue up 30.7% and a $260 52-week high in sight, investors are weighing bullish fundamentals against mixed insider activity.
Strong Earnings and Institutional Backing Drive Cloudflare’s Rally
Cloudflare’s intraday surge stems from a confluence of factors: Q3 revenue growth of 30.7%, topping EPS estimates by $0.04, and a $233.70 analyst price target. Institutional investors, including Norges Bank and Vanguard, added $541M and $6.17B to their stakes, signaling long-term conviction. However, insider selling of $124.6M—led by CFO Thomas Seifert and co-founder Michelle Zatlyn—introduces caution. The stock’s 3.25% gain reflects optimism about AI-driven cybersecurity demand and a $520B 2026 spending forecast, despite mixed analyst ratings and Piper Sandler’s recent $220 price target cut.

Cybersecurity Sector Gains Momentum as Cloudflare Outperforms
The NASDAQ Cybersecurity ETF (CIBR) gained 13% in 2025, trailing the Nasdaq-100 by 7 percentage points, as AI-enabled threats drive demand. Cloudflare’s 3.25% intraday gain aligns with sector trends, with CIBR’s top holdings—Palo Alto, CrowdStrike, and Cloudflare—representing 20% of the fund. Federal cybersecurity spending exceeding $25B annually and CIBR’s $11.1B AUM highlight the sector’s growth potential. Cloudflare’s rally, however, outpaces CIBR’s 13% annual return, suggesting its AI-focused edge computing and developer platforms are gaining traction.

Options and ETF Strategies for Capitalizing on Cloudflare’s Momentum
• MACD: -2.294 (Signal: -2.552, Histogram: +0.258) – bearish short-term trend
• RSI: 52.43 – neutral
• Bollinger Bands: Upper $211.46, Middle $200.61, Lower $189.75 – price near upper band
• 200D MA: $185.17 (below current price)
Cloudflare’s technicals suggest a short-term bearish trend but long-term range-bound consolidation. Key support at $197.77 (intraday low) and resistance at $204.62 (intraday high) define the immediate range. The Direxion Daily NFLX Bull 2X Shares (NFXL) and T-Rex 2X Long NFLX Daily Target ETF (NFLU) offer leveraged exposure to the sector, with NFXL up 0.95% and NFLU up 0.81% today.

Top Options:
1. NET20260116C202.5
• Call Option, Strike: $202.50, Expiry: 2026-01-16
• IV: 43.19%, Leverage: 29.82%, Delta: 0.5688, Theta: -0.74396, Gamma: 0.02691, Turnover: $13,512
• IV indicates moderate volatility, Leverage suggests high reward potential, Delta implies moderate directional sensitivity, Theta shows significant time decay, Gamma indicates strong price sensitivity
• This call offers a 101.47% price change potential if Cloudflare holds above $202.50. With high gamma and moderate delta, it’s ideal for a bullish breakout.
2. NET20260116C205
• Call Option, Strike: $205.00, Expiry: 2026-01-16
• IV: 43.67%, Leverage: 36.15%, Delta: 0.50097, Theta: -0.69862, Gamma: 0.02702, Turnover: $15,438
• IV suggests balanced volatility, Leverage indicates strong reward, Delta shows moderate directional bias, Theta reflects substantial time decay, Gamma implies robust price responsiveness
• This call could yield a 94.83% gain if Cloudflare breaks $205.00. Its high gamma and moderate delta make it suitable for a push above the 200D MA.
Action: Aggressive bulls may consider NET20260116C202.5 into a breakout above $204.62, while NET20260116C205 offers a safer entry if the 200D MA holds.

Backtest Cloudflare Stock Performance
The backtest of NET's performance following a 3% intraday increase from 2022 to the present shows a strategy return of 31.37%, with a benchmark return of 42.97% and an excess return of -11.61%. The strategy's CAGR is 7.20%, indicating moderate growth, while the Sharpe ratio of 0.34 suggests a reasonable risk-adjusted return. However, the maximum drawdown of 0.00% and a volatility of 21.06% reveal the strategy's high risk and potential for significant losses.

Act Now: Cloudflare’s Rally Shows No Signs of Slowing—Here’s How to Position
Cloudflare’s 3.25% intraday surge reflects institutional confidence and AI-driven cybersecurity demand, despite insider selling. The stock’s proximity to its $260 52-week high and a $233.70 analyst target suggest further upside, but short-term volatility remains. Investors should monitor the $200.61 Bollinger Middle Band and $197.77 support level. The sector leader CrowdStrike (CRWD) is up 5.71% today, reinforcing the cybersecurity theme. Buy the 202.5 call (NET20260116C202.5) for a bullish breakout or track NFXL for leveraged exposure. If $204.62 breaks, the 205 call (NET20260116C205) offers a high-gamma play on a sustained rally.