Ciena gapped higher at the end of last week, and traders came back ready to buy calls yesterday.
optionMONSTER's Heat Seeker tracking program detected heavy buying in the March 28 calls, starting with a large block for $0.72. Almost 15,000 of the contracts changed hands in the session, dwarfing the previous open interest of 307 contracts in clearly new positions.
CIEN was up about 2 percent when the activity hit and ended the session with a 4.08 percent gain to $26.02. Prices of those calls almost doubled, at one point trading for as much as $1.20.
These long calls lock in the price where a stock can be purchased, letting investors cheaply control a move to the upside. They can also generate significant leverage from a small move, which is exactly what happened yesterday. (See our Education section)
Last week's rally followed a partnership with Ericsson. Ciena's next earnings report is scheduled for March 6.
Total option volume in the networking-technology company yesterday was 8 times greater than average.
(A version of this post appeared on InsideOptions Pro yesterday.)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
