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Fund Manager
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Financial planner and options trader for 25 years. During the era, gained 10,000% in a 12 month period from March 1999 to March 2000 with about 1,100 trades. Lost 100% of that amount in the crash and failure of the market to open for a week after 9/11, causing option positions to... More
  • CIENA - to trade earnings or not? 0 comments
    Feb 28, 2011 3:05 PM

    Next Monday March 7th presents a quandry for CIENA (Nasdaq: CIEN) followers because there are strong bull and bear arguments in either direction.

    The market for telecom optical networking is booming and CIEN's strong share price uptrend certainly hints at strength in their core business.  Moreover, the booming need for data transfer (movies, images, PDF's) all bode well for CIEN. 

    And from a technical analysis perspective, even when the market goes down, CIEN often hold its own, thus showing good relative strength:

    BULLISH ARGUMENT:  JDSU reported earnings before CIEN and enjoyed a huge 25% spike the next day and CIEN may be peripherally benefitting from JDSU's good business.

    BEARISH ARGUMENT:  CIEN's is not even profitable and the consensus estimate for earnings this quarter (announced March 7 after the close) is -16c on revenues of $421M.  This might give traders enough of a pause when thinking of running up share prices JDSU-style after earnings.

    The best options bet might be to play a straddle or strangle in which the options holder profits on a large move in either direction.

    Disclaimer: The author makes no warrant for the accuracy of the content herein other than the links provided to traditional online sources of information for verification purposes. Additionally, investors shall not take any comments stated herein as advice to buy or sell any equities and if investors do so, they acknowledge that they have done their own proper due diligence and proceed at their own risk.  Currently no position in CIEN, having had puts in it in the past and learned how strong the stock is recently. The position was negative for several days when the recent drop in the Nasdaq allowed a 5% profit just to get out, thankfully!

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