Option Activity for Monday, June28,2010



Ciena (CIEN)

Options trading was brisk on Ciena Corp. (CIEN) on Friday, as more than 28,000 contracts crossed the tape. This surge in volume was more than double the stock's average daily trading volume of 13,205 contracts, according to data from WhatsTrading.com. In addition, 62% of the volume changed hands on the put side.

CIEN- june28,2010option



Overall, options players have been skeptical of the shares of CIEN. The International Securities Exchange (ISE) and Chicago Board Options Exchange (CBOE) report that 0.92 puts have been purchased to open for every one call purchased to open during the past 50 trading sessions. This ratio of puts to calls is higher than 84% of all those taken during the past year, pointing to a growing skepticism. The ratio of puts to calls is higher than 93% of all those taken during the past year. In other words, short-term options players have been more pessimistically aligned toward the shares only 7% of the time during the past 12 months.

Elsewhere, we find that short sellers still hold a large bearish position. Despite a 14.5% drop in short interest during the past month, more than 19.6 million CIEN shares remain sold short. This accumulation of bearish bets accounts for nearly 22% of the company's total float. A continued unwinding of these bearish bets could help to support the shares.

Technically speaking, the shares of CIEN have gained more than 26% since the beginning of the year. However, the security is showing signs of weakness. Since reaching a near-term peak of 19.50 in May, the stock has retreated under resistance at its 10-day and 20-day moving averages. The security has also fallen below key support at its 10-week and 20-week trend lines, which are poised to form a bearish cross.

CIEN-JUNE28,2010



Home Depot (HD)

The Home Depot Inc. (HD) was the center of some heavy option trading on Friday, as more than 68,500 contracts changed hands. This jump in volume was more than double the stock's average daily trading volume of 25,972 contracts, according to data from WhatsTrading.com. Furthermore, traders were feeling optimistic, as 83% of the volume changed hands on the call side.

HD-options-june28,2010



The ISE and CBOE have reported an increase in call trading recently. During the past 50 trading days, 2.7 calls have been purchased to open for every one put purchased to open. This ratio of calls to puts is higher than 84% of all those taken during the past 12 months, indicating a growing optimism.

What's more, the SOIR for HD comes in at 0.48, as call open interest more than doubles put open interest among options slated to expire in less than three months. This ratio of puts to calls is lower than 90% of the readings taken during the past 12 months. In other words, short-term options players have been more optimistically aligned toward the shares only 10% of the time during the past 12 months.

Wall Street is also smitten with the shares. According to Zacks, the stock has earned 18 "buy" ratings, seven "holds," and just two "strong sells." This configuration leaves ample room for potential downgrades should the shares continue their recent downtrend.

From a technical perspective, the shares of HD have edged roughly 4% higher since the start of 2010. However, the equity has recently fallen below its 10-day and 20-day moving averages, and has also dropped below key support at its 10-week and 20-week trend lines.

HD-june28,2010



Trina Solar (TSL)

Trina Solar Limited (TSL) has drawn the attention of Wall Street this morning, as Goldman Sachs initiated coverage with a "neutral" rating, while giving it a price target of $17.80. Prior to today's new coverage, Wall Street was quite enamored of TSL. According to Zacks, the stock has earned 14 "buy" ratings, one "hold," and one "strong sell." This bullish configuration leaves the shares vulnerable to potential downgrades that could weigh negatively on the shares.

Meanwhile, traders flocked to the equity's puts on Friday, as more than 14,100 put contracts changed hands. This put volume was more than nine times the stock's daily average, according to data from WhatsTrading.com. In addition, roughly 63% of the volume changed hands at the ask price.

TSL-option-june28,2010



TSL put trading has been on the rise on the ISE. The 10-day put/call volume ratio comes in at 0.91, which is higher than 71% of all those taken during the past 12 months.

What's more, short sellers are adding to their bearish bets. During the past month, the number of TSL shares sold short increased by nearly 17% to 5.2 million. This accumulation of bearish bets accounts for more than 8% of the company's total float. A continuation of this short-selling trend could create fresh downward pressure for the shares, as TSL struggles from a technical perspective.

Technically speaking, it has been a rough year for TSL, as the stock has retreated more than 32% since the start of 2010. The security has fallen below the support of its 10-week and 20-week moving averages, which are now serving as a layer of resistance.

TSL-june28,2010



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