OptionsHouse

Options Trading News

September 17, 2013  Tue 3:47 AM CT

CIEN: SEE CHART GET CHAIN FIND STRATEGIES
One investor is using a complex strategy in Ciena in betting that the telecom-equipment stock will hit multi-year highs by early 2014.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 1,375 January 30 calls for $0.95. Some 2,750 January 22 puts were sold at the same time for $1.22, and 2,750 January 18 puts were bought for $0.42.

The trader collected a credit of about $89,000 and now stands to profit from owning the calls if the shares keep rallying. The investor is also on the hook to buy the stock for $22 if its falls below that level, with a hedge in place at $18. (See our Education section for more on the strategy, which uses a put credit spread to finance long calls.)

CIEN rose 0.52 percent to $25.31 yesterday. The stock is up 61 percent so far this year, fueled by strong earnings reports, as large carriers boost capital spending. It last saw $30 in early 2008, so yesterday's investor is definitely looking for a big run.

The bullish three-way strategy accounted for roughly half the total option volume in CIEN during the session.
Share this article with your friends


OptionsHouse

Premium Services

Archived Webinar

Education & Strategy

Real vs. Synthetic

We now know that there are two ways of creating a call position, a put position, and a stock position. We can simply use the actual real security or we can recreate it synthetically. We can create these positions in both long and short forms and this ability sets up an interesting scenario--an arbitrage!

View more education articles »