Ciena Corporation (CIEN) Bears Aren't Buying M&A Buzz

It's M&A Monday, and Ciena Corporation (NYSE:CIEN) is making headlines after announcing it will buy fellow network equipment name Cyan Inc (NYSE:CYNI) in a cash-and-stock deal worth roughly $400 million. The news has sent CIEN up 1.5% this afternoon to $21.61, but a number of option traders don't think the equity can sustain the positive price action.

Taking a quick step back, puts are trading at four times the average intraday rate, and are outpacing calls by a more than 2-to-1 margin. CIEN's weekly 5/8 21.50-strike put has seen the most action, and all signs suggest new positions are being purchased. In other words, these option bears expect the security to breach the $21.50 mark by week's end, when the series expires.

Today's accelerated put activity runs counter to the withstanding trend seen in CIEN's options arena. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the stock's 10-day call/put volume ratio of 8.73 rests in the 84th annual percentile.

Technically speaking, Ciena Corporation (NYSE:CIEN) has been bouncing higher since hitting a nearly two-year low of $13.77 in mid-October, up 57%. With a healthy 14% of the stock's float sold short, it's possible that some of the recent call buying could be a result of short sellers hedging against any additional upside.