Just a quick note on the CIENA chart.
Position: Put options at 14 strike price for November, purchases on Oct 5th.
The stock has had 3 days down on relatively strong volume. A news article that is the likely reason for this sell off is Ciena Prices 320-Million 3.75% Convertible Notes
Why such a negative reaction?
I believe the reasoning is the massive amount of debt the company has been taking on.
From their Q3 balance statement we have the following
Convertible notes payable (debt)
October 2009..............798,000,000
July 2010 ....................1,174,580,000
Total stockholders' equity
October 2009..............455,838,000
July 2010 ....................228,295,000
This debt increase has occurred BEFORE the addition $320 million was announced a few days back.
The following information was taken from : Yahoo Finance
It is the entire communication Equipment industry ranked by LT debt to equity and guess who is topping the chart?
It is clear that Ciena is over leveraged and currently requires debt to finance its current debt obligations.
And one technical that has produced a Sell signal is the ADX as the DI- line has crossed the DI+ line today. The ADX line which shows trend strength is above the 25 indicating a strong trend.
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