Option Sir Breaks Down Hot Topics | Soaring 76% in Three Days! After Securing Marvell Order, Breakthrough for AI Optical Interconnect 'Bottleneck' Technology?

In the optical communications industry$POET Technologies (POET.US)$The stock price surged. According to Futubull data, the closing price of the US stock market on the 22nd was $12.77, a 24.6% increase from the previous day.The stock has cumulatively risen by approximately 75.9% over the past three trading days, hitting an intraday high of $12.95. Trading volume also soared to 84.22 million shares, pushing the stock price to its highest level in nearly 11 years.

Why the rapid rise?

1. Direct catalyst: Marvell's mass production orders reshape earnings expectations

According to reports,CFO Thomas Mika stated that POET Technologies received a formal purchase order from Marvell, with the related order value potentially exceeding $5 million by 2026.The market views this as a positive signal for POET Technologies entering mass production orders.

2. Long-term optimistic outlook: Positioned in the scarce track of AI optical communications

Market expectations for the commercialization of 800G optical engines are growing. POET Technologiesis focused on optical interconnect technology for artificial intelligence (AI) data centers. With a sharp increase in data processing demands, issues such as insufficient bandwidth and rising power consumption have become common challenges in server-to-server communication, making POET Technologies' solutions highly anticipated to alleviate these bottlenecks.

3. Reduction in administrative uncertainties

Moreover, investors are generally optimistic about the reduced uncertainties regarding tax implications and listing locations. POET Technologies stated that while it may still meet the definition of a Passive Foreign Investment Company (PFIC) in 2025, it is expected to no longer apply in 2026. Additionally, the company mentioned plans to relocate its headquarters to the United States, further strengthening market expectations that it will be easier for US investors to invest in the future.

Trading Perspective: How is the options market viewing this?

Signs of overheating in the derivatives market are becoming increasingly evident. According to data, on April 22, the daily trading volume of POET Technologies options reached 318,000 contracts, far exceeding the 30-day average of 66,000 contracts.The put/call volume ratio is approximately 0.23, with call options dominating, and implied volatility has risen to around 137%.These signs indicate that short-term capital is highly concentrated in chasing upward price movements.

However, it is important to note that the implied volatility (IV) is at 139.29%, historical volatility (HV) is at 148.57%, IV rank is 67, and IV percentile is 94%, indicating that although market sentiment is bullish, option prices themselves are quite high. Based on implied volatility, the expected short-term price fluctuation range is approximately ±$1.32 before April 24, and ±$2.79 before May 1.In other words, option prices remain 'bullish' in the short term, but there is also a situation of 'higher buying prices.'

On the other hand, this surge in stock price seems to be more driven by the anticipated inflow of supply and demand dynamics in the AI optical interconnect market, rather than being purely profit-driven. Marvellcompleted its acquisition of Celestial AI in February, and Reuters reported in April that Google was in talks with Marvell regarding the development of AI chips. Additionally, POET Technologies' CFO mentioned orders related to Marvell, which caught market attention, causing the company's share price to soar 76% in the past three days, hitting an 11-year high.

However, POET Technologies' revenue in the most recent quarter was only $341,000, with a net loss of $42.7 million, indicating that the company is still in its early stages of development.Therefore, POET Technologies is currently both a 'concept stock full of infinite possibilities in AI optical communications' and a 'theme-driven, highly volatile small-cap stock.'On April 23, pre-market sentiment for POET Technologies retreated, with shares falling -5.72% in pre-market trading.。The market widely expects the company to release its next earnings report in mid-to-late May; therefore, short-term options expiring on April 24 or May 1 will be more influenced by supply and demand dynamics rather than profitability, while options expiring in July or later will depend on the company’s developmental progress.

Based on this premise, even if you are bullish on this stock long-term, it is advisable not to overly rely on directly purchasing call options in the short term. Instead, using a more moderate approach to bet on POET Technologies’ long-term upside may be more appropriate.

If you hold the stock and are reluctant to take profits now, but want to pursue higher short-term gains,

the safest move after a sharp rise in stock price is to protect downside risk with put options while collecting upside gains through covered call options.

“Buy on dips” + leverage high volatility

Given the relatively high IV value of POET Technologies, it is more rational to choose the sell-side to collect option premiums when bullish. However, be sure to reserve sufficient margin for exercise and delivery; otherwise, forced liquidation may lead to potential losses.

Believes that the stock price is driven by short-term sentiment and aims to capitalize on a rebound or pullback trend.

Such stocks rise quickly but fall even faster. Even in a market favorable to call options, hedging the risk of a pullback after a significant rise can be effective.

Continues to be bullish but is concerned about the erosion of single-leg call options.

In this case, you can choose to sell a call option above your existing call position to hedge, to some extent, against time decay while aiming for gains from a moderate rise in the stock price. Of course, if the stock price falls, this strategy could also incur losses due to leverage.

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Risk Warning

An option is a contract that gives the holder the right, but not the obligation, to buy or sell an asset at a fixed price on or before a specified date. The price of an option is influenced by various factors, including the current price of the underlying asset, the strike price, time to expiration, and implied volatility. Implied volatility reflects the market’s expectations of the asset's fluctuation over a period and is derived using the BS pricing model. It is generally considered an indicator of market sentiment. When investors expect higher volatility, they may be willing to pay a higher price for options to hedge risks, resulting in higher implied volatility. Traders and investors use implied volatility to assessthe attractiveness of option prices,identify potential mispricings, and manage risk exposure.

Disclaimer

This content is for reference only and should not be regarded as an invitation, solicitation, or recommendation to buy or sell any investment product or make investment decisions, nor should it be interpreted as professional advice. Options contracts are derivative products and are not suitable for all investors. You should carefully consider whether you are suitable for such trading based on your own investment experience, investment objectives, financial resources, and other relevant conditions. Losses from trading options contracts can be substantial. In certain situations, your losses may exceed the initial margin deposited. Even if you have set contingent orders, such as 'stop-loss' or 'limit' orders, these may not prevent losses. Market conditions may render such orders unexecutable. You may be required to deposit additional margin within a short period. If you fail to provide the required amount within the specified time, your open positions may be liquidated. However, you will still be responsible for any shortfall in your account resulting from such liquidation. Therefore, before trading, you should study and understand index options and carefully consider whether such trading suits your financial situation and investment objectives. If you trade options, you should be familiar with the procedures for exercising options and the rights and responsibilities upon exercise and expiration.

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