CIEN Analysis

Ciena Corp. (CIEN)

CIEN publishes earnings on Thursday before the opening bell.

I shall use the JAN series of options, which trades for the last time 44 days hence, on Jan. 20.

Implied volatility stands at 51%, which is in the 46th percentile of its annual range and the 73rd percentile of the most recent broad movement. The price used for analysis was $21.60.

Iron condor, short the $23 calls and long the $24 calls,
short the $19 puts and long the $18 puts,
sold for a credit and expiring Jan. 21.
Probability of expiring out-of-the-money

JAN Strike OTM Δ
Upper 23 73.4% 32
Lower 19 71.6% 23

The premium is $0.41, which is 41% of the width of the position’s wings.

The risk/reward ratio is 1.4:1.

The zone of profit in the proposed trade covers a $2.20 move either way. The biggest immediate move after each of the past four earnings announcements was $4.07, and the average was $2.66. After eliminating the maximum and minimum post-earnings movements, the central tendency is $2.90.

Decision for My Account

I’m passing on CIEN. I want a wider zone of profit in comparison to historical price moves immediately after an earnings announcement.

— Tim Bovee, Portland, Oregon, Dec. 5, 2016

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Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License


Creative Commons License


All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.


Based on a work at www.timbovee.com.

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