ACIA has nearly closed its mid-April bear gap
Shares of Acacia Communications, Inc. (NASDAQ:ACIA) are up 4.5% to trade at $39.93, after Piper Jaffray analyst Troy Jensen upgraded the stock to "overweight" from "neutral," and hiked his price target to $46 from $38. Jensen said the latest earnings season has been "fairly good" for the optical component sector, as almost all suppliers continue to report impressive guidance and revenue.
On the charts, Acacia Communications stock has been on the mend since a bear gap sent it to record lows in mid-April following a U.S. supply ban on China's ZTE. Earlier this month, the shares gapped back above their 120-day moving average after earnings, a trendline that had posed as a ceiling since April. Overall, ACIA is up 5% year-to-date.
A round of short covering has likely fueled recent upside for ACIA stock, with short interest down more than 10% in the past two reporting periods. These bearish bets still account for nearly 17% of ACIA's total available float, and would take just over two weeks to buy back, at the security's average pace of trading.
Those wanting to bet on ACIA's short-term trajectory may want to consider purchasing premium on the security. This is per the stock's Schaeffer's Volatility Index (SVI) of 40%, which ranks in the low 7th percentile of its annual range. This suggests that muted volatility expectations have been priced into short-term ACIA options -- a boon to potential buyers.