Ciena Corp. (CIEN)
Update 6/2/2017: CIEN rose sharply into unprofitable territory, with little hope of becoming profitable in the week before expiration. I took the loss.
Shares showed a net rise of 17.2% over two days, or a +3,129% annual rate. The options position produced a -47.3% loss on debit for a -8,632% annual rate.
CIEN publishes earnings on Thursday before the opening bell.
I shall use options that trade for the last time nine days hence, on June 9.
Implied volatility stands at 47%, which is 4.3 times the VIX, a measure of the volatility of the S&P 500 index.
CIEN’s IV stands in the 59th percentile of its annual range and the 85th percentile of its most recent broad movement.
The price used for analysis was $23.53.
The premium is 49% of the width of the position’s wings.
The risk/reward ratio is 1.1:1.
Decision for My Account
I have entered an order on CIEN as described above. The stock at the time of entry was priced at $23.56.
By Tim Bovee, Portland, Oregon, May 31, 2017