An option trade for INFN

Not that any of us are trying to time the market here, but I thought I’d share a video I found on Bloomberg through routine scanning of news and updates for Infinera. In the video interview (link below), Jim Strugger from MKM discusses a calculated options trade to place ahead of earnings on Wednesday night. MKM recently hosted an investor’s conference for Infinera where they came out really liking the company and its prospects. They concluded with an investor’s briefing stating “The best is yet to come” and set a $26 price target.

The Infinera portion of the video begins about 2:00 into the segment.…

They recommend a trade (not an investment) to purchase the $24 September calls at around $.80 to take advantage of any earnings ‘catalyst’ and claim limited risk on the downside due to past observations of earnings reactions.

There were two interesting points from the video for which I have my own takeaway observation:

  1. When Infinera posts an earnings beat, the stock reacts with a generous uptick the next day.

  2. When Infinera posts earnings inline or slightly off the mark, the stock reacts with benign negative affects.

Whether or not you choose to “trade” or invest, my takeaway from the video is that Infinera seems to have a large base of disciplined investors who remain steadfast through each of the earnings seasons. Quite a different place to be than the high profile stock variety touted by talking heads and owned by scores of trigger happy “investors”.

Another reason to love this stock - the company you keep with its owner investors.