Don't Sweat This Software Stock's Pivot Lower

OKTA nabbed a record high earlier today before pulling back

Earlier today, Okta Inc (NASDAQ:OKTA) nabbed a fresh record high of $141.85. However, the stock has since pivoted lower, at last check down 6.1% to trade at $132.18, on track for its worst day since March 4. There's reason to believe investors shouldn't fret much about the software stock's sudden downturn though, if history is any guide.

More specifically, implied volatilities on the equity are at historically low levels, per OKTA's Schaeffer's Volatility Index (SVI) of 34%, which registers in the 1st percentile of its annual range. According to Schaeffer's Senior Quantitative Analyst Rocky White, in the three other times in the past five years the equity has been trading near a 52-week high while its SVI ranked in the 20th annual percentile or lower, resulting in an average one-month gain of 18.4%, with all three returns positive.

From the stock's current perch, that means fresh record highs could be on the horizon. Plus, today's pullback has found support at the shares' 40-day moving average, a trendline that has contained drops since April.

Meanwhile, OKTA has had a tendency to make bigger moves than what options were pricing in over the past year. This is per the stock's Schaeffer's Volatility Scorecard (SVS) reading of 92 out of 100, meaning buying premiums on the stock has been an attractive strategy for options traders.