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.

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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.

Premium:	$1.95	Expire OTM
CIEN-iron fly	Strike	Odds	Delta
Long	27.50	92.9%	9
Break-even	25.45
Short	23.50	51.5%	53
Puts
Short	23.50	48.6%	47
Break-even	21.45
Long	19.50	92.7%	6

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