Daily Options Selling Strategy | POET's stock price surged in April before crashing, plummeting over 47% in a single day. How to use options to capture high volatility after a black swan event?

1. POET hit by a black swan, stock price halved in a single day

Extreme divergence occurred at the individual stock level within the US optical communication sector in the previous trading session. $POET Technologies (POET.US)$ On April 27th, the company encountered significant negative news,Stock price plummeted by 47.35%closing at $7.95 per share, with an intraday low of $7.50.

The direct trigger for this crash was the major adverse news disclosed by the company before the market opened on April 27th: $Marvell Technology (MRVL.US)$ All purchase orders related to POET have been canceled. Marvell issued a written cancellation notice on April 23rd, citing that POET violated a confidentiality agreement in public disclosures, leaking information about purchase orders and shipments.

2. Event Review: From a rising star to a 'single-day crash'

Just a week ago, $POET Technologies (POET.US)$ the stock price showed outstanding performance.As of last Friday's close, POET’s cumulative increase reached 154%, driven by core factors including:

- Explosive demand for AI optical modules:POET’s patented 'optical interposer' technology is considered a key solution for optical interconnection in AI data centers.

- Expectations of strategic cooperation:POET is collaborating with Sivers Semiconductors to develop External Light Source (ELS) modules, targeting the cutting-edge Co-Packaged Optics (CPO) sector, with mass production anticipated by the end of 2026.

Marvell's cancellation of orders directly impacted the company’s revenue visibility. Notably, POET had already been a target for short sellers prior to this crash.Wolfpack Research released a short-selling report on April 14, accusing POET of being an 'obviously hyped stock,' stating that the company has changed its business model seven times over the past decade.

POET’s fundamentals have come under severe scrutiny following this incident. The company’s revenue scale is extremely small, with projected annual revenue of only about one million US dollars in 2025, while net losses are close to 63 million US dollars.After Marvell canceled its order, the company disclosed another customer purchase order worth approximately five million US dollars, but this is far below previous market expectations.

Although POET has not completely lost its value proposition at present, the strategic cooperation with Sivers Semiconductors is still ongoing, targeting the CPO external light source module market. The company has also released its 1.6T optical receiver developed in collaboration with Semtech. However, these projects are still far from reaching mass production and generating significant revenue, and market confidence in its execution capabilities has been significantly weakened due to the current trust crisis.

III. Seller Options Strategy

Following the sharp decline on April 27, POET’s options implied volatility saw a significant jump.

1. Sell 1 contract $POET Technologies (POET.US)$ 20260501 10C, estimated margin required (for reference only): $1000 ($10 × 100)

Opportunity filtering logic:

Marvell cited 'breach of confidentiality obligations' as the reason for canceling the order, which could affect POET’s cooperation with other potential clients. In the optical module industry, customer trust and confidentiality capabilities are core competencies. Even if POET’s technological narrative holds true, it will take years to progress from prototype to mass production and from mass production to scaled revenue. During this period, the company will need continuous financing, and the risk of equity dilution cannot be ignored.

It is difficult to determine the bottom of the stock price at this point, but by selling out-of-the-money Call options, one can capture the implied volatility premium driven by this extreme event.

IV. Risk Control Reminder

Although the seller strategy has a high probability of success, investors must still manage risks effectively:

– Position management is key:The biggest risk for sellers lies in black swan events. It is recommended thatthe margin requirement for any single underlying should not exceed 20% of total capital. Never sell options beyond your capacity to handle them just for the sake of greedy premium collection.

Make the most of the options seller zone to understand income strategies for selling options,Earn option premiums!

Options Risk Warning

An option is a contract that grants the holder the right, but not the obligation, to buy or sell an asset at a fixed price on a specific date or at any time before that 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 for the level of volatility in the option over a future period. It is a data point derived inversely from the Black-Scholes option pricing model and is generally regarded as an indicator of market sentiment. When investors anticipate greater volatility, they may be more willing to pay a higher price for options to hedge risks, resulting in higher implied volatility. Traders and investors use implied volatility to assess the attractiveness of option prices, identify potential mispricings, and manage risk exposure.

Disclaimer

This content does not constitute any offer, solicitation, recommendation, opinion, or guarantee of any securities, financial products, or tools. The risk of loss in trading options can be substantial. In some cases, losses may exceed the initial margin deposited. Even if you set contingent orders such as 'stop-loss' or 'limit' orders, these may not prevent losses. Market conditions may make 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. Therefore, before trading, you should study and understand options and carefully consider whether such trading is suitable for you based on your financial situation and investment objectives. If you trade options, you should be familiar with the procedures for exercising options and the rights and obligations upon exercise and expiration. Options trading carries extremely high risks and is not suitable for all investors. Investors should carefully readCharacteristics and Risks of Standardized Options。

Editor/Doris

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