Options Bears Chime in on CIEN Ahead of Earnings

CIEN has made outsized post-earnings moves in the past eight sessions

Deputy Editor
Dec 9, 2020 at 2:13 PM
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Tech stock Ciena Corporation (NYSE:CIEN) is 3% lower at $46.85 today, ahead its fiscal fourth-quarter earnings report, due out before the open tomorrow. After bouncing off the $42 level in late November, CIEN posted 10 straight sessions of gains before running into pressure just above $48. Now, plenty of investors are gambling on that area serving as a stiff ceiling amid a post-earnings move lower. 

CIEN Dec 9

More specifically, puts are trading at double what's typically seen at this point. So far, 6,247 puts have crossed the tape, with put option volume pacing for the 97th percentile of its annual range. The December 43 put is the day's most active option, followed by the December 47 put, with buy-to-open activity detected at the latter. 

Today's penchant for puts runs alongside recent sentiment in the options pits, as CIEN's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.11 stands in the 90th percentile of its annual range. In other words, puts have been bought to open over calls by a wider margin only 10% of the time over the past year.

Ciena has a history of making volatile post-earnings moves.  Looking back at its past eight reports shows CIEN ending half of these next-day sessions higher, including surges of 20 and 26% in June and December of 2019. The security has averaged a post-earnings swing of 12%, regardless of direction and this time around, the options market is pricing in a slightly bigger move of 13.4%. 


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