Option Trade 
Ciena Corporation (NYSE:CIEN) Calls 
Wednesday, September 02, 2015

**OPTION TRADE: Buy the CIEN Oct 2015 22.000 call (CIEN151016C00022000) at approximately $1.65. Place a protective stop loss at $0.65, and a pre-determined sell at $3.30.

by Ian Harvey

September 02, 2015


Ciena Corporation (NYSE: CIEN), a provider of communications networking equipment, software and services that support the transport, switching, aggregation and management of voice, video and data traffic, is scheduled to release its Q315 earnings data on Thursday, September 3rd. Analysts expect Ciena to post earnings of $0.34 per share and revenue of $629.60 million for the quarter.

Global economic growth expectations have tempered corporate network upgrades, though Ciena is still benefitting from increased bandwidth demand and fiber upgrades on the major Internet service providers. As such, there are still opportunities to be found for savvy CIEN stock options traders.

Historically, Ciena has bested Wall Street’s expectations in all but two of the past eight quarters, setting the firm on solid fundamental footing.

As such, it should come as no surprise that some in the brokerage community have set their sights a bit higher. Specifically, EarningsWhipser.com reports that Ciena’s third-quarter whisper number comes in at 37 cents per share, a full three cents better than the consensus. Hitting this target will definitely push the stock price higher.

Technical Details

Ciena will open at $22.00 this morning. The company’s 50 day moving average price is $23.85 and its 200-day moving average price is $22.64.

Ciena has a 12-month low of $13.77 and a 12-month high of $26.50. The firm’s market capitalization is $2.59 billion.


Previous Earnings

Ciena last posted its earnings results on Thursday, June 4th. The company reported $0.35 earnings per share for the quarter, topping the analysts’ consensus estimate of $0.23 by $0.12. The business had revenue of $621.60 million for the quarter, compared to analyst estimates of $603.92 million.

During the same period in the previous year, the firm posted $0.17 earnings per share. The firm’s revenue was up 11.0% compared to the same quarter last year. On average, analysts expect Ciena to post $1.21 EPS for the current fiscal year and $1.57 EPS for the next fiscal year.

Future Earnings

For the company’s fiscal third-quarter report, the consensus is for a profit of 34 cents per share, two cents better than the same quarter last year. Sales, meanwhile, are expected to rise 4.4% year-over-year to $630 million in the third quarter.

Positive Factors

The company had a strong first quarter in 2015, driven by improved diversity for non-telco customers, according to Raymond James.

Ciena has been doing stable work with large customers including AT&T, Comcast (CMCSA) and Verizon (VZ), which is improving the company's strength.

In early August, Ciena acquired Cyan Inc. (CYNI) for $488 million. Raymond James believes that the street's earnings estimates do not reflect this acquisition.

Analysts Opinions

Last Wednesday saw CIEN receive a rating upgrade to "outperform" from "market perform" at Raymond James.

Raymond James maintained its $27 price target on the stock.

"Our checks indicate that Ciena has taken share from Fujitsu (FJTSY) and Coriant and its top customer AT&T (T) for its long haul and metro deployments, and will continue to do so," Raymond James said in a note.

The company has also been the subject of a number of other research reports:-

• B. Riley began coverage on Ciena in a report on Tuesday, July 21st. They issued a “buy” rating and a $30.75 target price on the stock.

• MKM Partners set a $27.00 price target on Ciena and gave the stock a “buy” rating in a report on Wednesday, May 20th.

• JPMorgan Chase & Co. reissued a “buy” rating on shares of Ciena in a research report on Thursday, June 4th.

• Citigroup Inc. reiterated a “neutral” rating and issued a $26.00 price target (up from $22.00) on shares of Ciena in a research report on Saturday, June 6th.

• Finally, Zacks upgraded Ciena from a “hold” rating to a “buy” rating and set a $24.00 target price for the company in a research report on Tuesday, May 5th.

Analysts are very optimistic about CIEN with 17 “buy” ratings, and only three “holds” and one “sell” rating. Additionally, the 12-month price target for CIEN stock rests at $29, a 30% premium to current levels around $22.

Harvey’s Options Volatility Indicator


Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

**OPTION TRADE: Buy the CIEN Oct 2015 22.000 call (CIEN151016C00022000) at approximately $1.65. Place a protective stop loss at $0.65, and a pre-determined sell at $3.30.

”Success is simple. Do what's right, the right way, at the right time.”

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Options traders are not successful because they win.
Options traders win because they are successful.

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