There's no bad news heard about $Lumentum(LITE.US)'s fundamentals. The current stock price movement looks more like a pullback after a rally.
The implied volatility in the top-left chart shows a relatively low earnings peak, and the baseline value before and after earnings is in a gradual downtrend.The stock price currently seems to show signs of forming a top. If the implied volatility maintains this declining baseline, the stock price will definitely enter a consolidation phase. If implied volatility can rebound similarly to early March next week, then there's still some hope for the stock price.The top-right chart shows the recent volatility spread, which hit its deepest negative value recently on 05/28. Call options once sparked a rally, but bounced back above the zero line within one trading day.Monday and Tuesday's trading are crucial. If trading over the next two days can clearly return to negative values, then the one-month downtrend in the volatility spread has a chance to continue.The worst-case scenario is that in the upcoming trading sessions, volatility continues to decline slightly with small oscillations, and the volatility spread also remains above the zero line. This pattern would declare the end of the stock price's upward movement.The bottom-left chart is a zoom-in of the volatility trend. Both the green dashed line (Calls) and red dashed line (Puts) have fallen to relatively low levels since the beginning of the year.The bottom-right chart shows the single-day options position change on Friday last week. Bullish and bearish bets were about even, with bearish option open interest for next Friday (06/05) even slightly stronger. If this situation continues, we are likely to see the volatility spread return above the zero line.Conclusion:Although the decline in volatility and the return of the volatility spread above the zero line (Put-dominated) effectively declare the end of a rally, this is also a necessary incubation condition for the next rise. Those who are very bullish on $Lumentum(LITE.US)'s fundamentals can look to add long positions at points of particularly low volatility before the next earnings report. That time hasn't come yet. Has the rally already ended? We'll need to watch for another two or three trading days.
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