Implied Volatility Surging for Lumentum Stock Options
Investors in Lumentum Holdings Inc. LITE need to pay close attention to the stock based on moves in the options market lately. That is because the Jul 18, 2025 $115.00 Put had some of the highest implied volatility of all equity options today.
What is Implied Volatility?
Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.
What do the Analysts Think?
Clearly, options traders are pricing in a big move for Lumentum share, but what is the fundamental picture for the company? Currently, Lumentum is a Zacks Rank #3 (Hold) in the Communication - Components Industry that ranks in the Bottom 22% of our Zacks Industry Rank. Over the last 60 days, six analysts have increased their estimates for the current quarter, while none have revised their estimates downward. The net effect has taken our Zacks Consensus Estimate for the current quarter to move from 65 cents per share to 81 cents in the same time period.
Given the way analysts feel about Lumentum right now, this huge implied volatility could mean there's a trade developing. Often times, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.
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Check out the simple yet high-powered approach that Zacks Executive VP Kevin Matras has used to close recent double and triple-digit winners. In addition to impressive profit potential, these trades can actually reduce your risk.
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This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
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