Networking Stock Set Up for Bulls

It looks like the perfect time to pick up premium on CIEN

Jan 28, 2020 at 12:59 PM
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Networking specialist Ciena Corporation (NYSE:CIEN) seems to be setting up nicely for bulls. The shares just spiked to the upside from a recent consolidation pattern stemming from a December earnings breakout, hinting the stock is prepared for another move higher. With the previously resistant 30-day moving average still playing catch-up, the upside potential for CIEN looks strong.

cien stock jan 24

On the sentiment side, the 6% of CIEN float dedicated to short interest may not seem like a lot, but consider that much of this was added a few months back when the shares were trading down below $40 -- telling us many short sellers are holding losing positions and could be compelled to cover. If so, short-covering tailwinds could push Ciena higher.

Plus, data from the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows an unusual interest in long puts, based on the 50-day put/call volume ratio of 0.97 that ranks in the 84th annual percentile. An unwinding of these bearish positions could help drive CIEN stock higher. Our recommended call option has a leverage ratio of 6.7 and will double on a 14.3% move in the underlying security.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this CIEN commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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