I’ve now bought a little calls in…

The markets are having a hard time holding their rally and the Nasdaq’s even turned red now.

I did a small pre-earnings trade.  Ciena reports earnings tomorrow morning before the open and I’ve read nothing but explanations of why they are likely to really miss and guide lower and get crushed tomorrow.  And that might very well happen.  But as I answered one of the questions on the chat that was specially about how to position for Ciena’s report tomorrow, I’ll repeat again here now:

I think expectations are very low for Ciena heading into that report tomorrow morning. The problem is that if the company does disappoint there’s probably a 10% underside. That said, I’d expect Ciena comes in okay and that the stock pops tomorrow. I might take a flyer on some calls before the report…but it’s a risky proposition, as any earnings report trade is. Let you guys know if I do.

I’ve now nibbled on a some Ciena calls dated in October, working on strikes between $13 and $15 or so.  This is a very aggressive kind of trade, using such close expiry dates and out-of-the-money calls to boot, which means we’re likely to either catch a bin tomorrow or will end up with probably close to a total loss on the capital risked here.  We’ve had some pretty consistent and decent luck with these pre-earnings trades — but let’s not kid ourselves that such trades are indeed closer to gambling than investing.

At any rate, I’ve risked some capital on some very risky Ciena call options. But not enough capital that it’ll make much difference to my life ten years from now, if you know what I mean.