Ciena Corp. (CIEN)
Update 3/21/2017: CIEN gapped down sharply immediately after earnings were published and declined further for five trading days before settling on a plateau. I exited at 26.9% of maximum potential profit.
Shares declined by 6.4% over 14 days, or a -166% annual rate. The options position produced a 36.8% yield on debit for a +595% annual rate.
CIEN publishes earnings on Wednesday before the opening bell.
I shall use the APR series of options, which trades for the last time 45 days hence, on April 21.
Implied volatility stands at 48%, which is 4.3 times the VIX, a measure of the volatility of the S&P 500 index.
CIEN’s IV stands in the 55th percentile of its annual range and the 76th percentile of its most recent broad movement.
The price used for analysis was $25.99.
|Premium:||$2.79||Expire OTM||iron fly|
The premium is 47% of the width of the position’s wings.
The risk/reward ratio is 1.2:1.
Decision for My Account
I have entered a position on CIEN as described above. The stock at the time of entry was priced at $26.01.
By Tim Bovee, Portland, Oregon, March 7, 2017