CIEN Analsis

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
CIEN   Odds Delta
Calls
Long 32.00 93.0% 9
Break-even 28.79
Short 26.00 52.7% 53
Puts
Short 26.00 47.4% 47
Break-even 23.21
Long 20.00 93.2% 5

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

 

 

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