A lackluster investor day -- where the company offered unimpressive margin guidance for the fiscal year -- sent Ciena Corporation (NYSE:CIEN) shares reeling earlier this month, with the stock falling to a multi-month low of $18.88 on April 15. While the tech concern has pared a portion of its losses in recent sessions, it remains perched beneath former support in the $22 region, which could now switch roles to act as resistance. What's more, the stock is also sitting south of its formerly supportive 200-day moving average, which could reinforce resistance in the $22-$23 neighborhood.
Despite the stock's fundamental and technical struggles of late, options players have been picking up bullish bets at an accelerated clip. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 50-day call/put volume ratio of 9.97 indicates that traders have bought to open nearly 10 CIEN calls for every put during the past 10 weeks. What's more, this ratio sits just 5 percentage points from a 12-month peak, pointing to a healthier-than-usual appetite for long calls in recent months.
Meanwhile, analysts also remain optimistic toward CIEN, which has underperformed the broader S&P 500 Index (SPX) by more than 16 percentage points during the past two months. Specifically, 13 brokerage firms maintain "strong buy" opinions, and another pair offer up a "buy" rating, compared to four "holds" and not a single "sell" suggestion.
In the same vein, the consensus 12-month price target on the equity rests at $27.90, representing expected upside of 35.4% to CIEN's current price of $20.60. Plus, this target sits in territory not explored since October.
Should CIEN backpedal in the face of former support, a mass exodus of option bulls could translate into added headwinds for the shares. Furthermore, a round of downgrades and/or price-target cuts could exacerbate selling pressure on CIEN.
Traders interested in wagering on more downside for Ciena Corporation (NASDAQ:CIEN) might consider buying the in-the-money October 26 put, which was last asked at $6.25. The stock's Schaeffer's Volatility Scorecard (SVS) currently stands at a lofty 79, implying that CIEN tends to make outsized moves, relative to what the options market has priced in.
The Case for Big Moves in IWM and QQQ
Featured Partners: AOL DailyFinance
© 2015 Schaeffer's Investment Research, Inc. 5151 Pfeiffer Road, Suite 250, Cincinnati, Ohio 45242
Phone: (800) 448-2080 FAX: (513) 589-3810 Int'l Callers: (513) 589-3800 Email: firstname.lastname@example.org
All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.
Market Data provided by QuoteMedia.com | Data delayed 15-20 minutes unless otherwise indicated.