Celestica's Strategic Pullback: A High-Probability Bullish Options Trade for Income-Oriented Investors

Celestica Inc. (CLS) has emerged as a compelling case study for income-oriented investors seeking to leverage defined-risk options strategies in a high-growth, non-dividend-paying stock. With a recent earnings report that exceeded expectations and a technical setup that aligns with a bullish bias, the company's stock offers a unique opportunity to deploy a bull put spread—a strategy that capitalizes on volatility while capping downside risk.

Fundamental Catalysts: Earnings Momentum and Guidance Upside

Celestica's Q2 2025 results underscored its dominance in the electronics manufacturing sector. Revenue surged 21% year-over-year to $2.89 billion, driven by robust demand in its Connectivity & Cloud Solutions (CCS) segment, particularly for 800G networking switches and hyperscaler solutions. Non-GAAP adjusted EPS of $1.39 (up 54% YoY) and a record 7.4% operating margin signaled operational efficiency and pricing power. The company's updated 2025 guidance—$11.55 billion in revenue and $5.50 in non-GAAP EPS—reflects confidence in sustaining this momentum.

Technical Setup: A Pullback Within a Bullish Trend

Despite a 103.4% year-to-date rally, CLS has recently experienced a strategic pullback, closing at $179.80 on August 20, 2025, after a two-day decline from $213.45. This correction has created a high-probability entry point for a bull put spread, a strategy that benefits from the stock stabilizing above key support levels.

Key Technical Levels for the Bull Put Spread:
- Primary Support: $192.13 (August 14 low)
- Secondary Support: $172 (Fibonacci 23.6% retracement)
- Moving Averages: 50-day at ~$204, 200-day at ~$185

The RSI (72) and Bollinger Bands near the upper band suggest overbought conditions, increasing the likelihood of a near-term consolidation phase. Meanwhile, the MACD histogram's bearish crossover and oversold RSI (29) confirm downward momentum, but the 50-day moving average remains bullish, indicating a potential rebound above $200 could reignite upward bias.

Bull Put Spread Strategy: Defined Risk, Defined Reward

The proposed trade involves selling a July 18, 2025 put at the $110 strike and simultaneously buying a $105 put in the same expiration cycle. This setup generates a premium of $85 per contract, with a breakeven point at $109.15. If CLS remains above $110 at expiration, the trade yields a 20% return in ~30 days. Maximum risk is capped at $415 per contract if the stock falls below $105.

Risk Management Considerations:
- Stop-Loss Trigger: Exit the trade if CLS breaks below $115 or if the spread widens to $1.70.
- Scenario Analysis: A rebound above $200 would validate the bullish case, while a break below $172 could extend the decline toward $180.

Why This Strategy Works for CLS

1. Earnings-Driven Momentum: Celestica's strong fundamentals and guidance revisions suggest a floor for the stock, even amid short-term volatility.
2. Volatility Arbitrage: The recent pullback has created a favorable risk-reward profile, with technical indicators pointing to a potential stabilization phase.
3. Defined Risk: The bull put spread limits downside exposure while allowing participation in a potential rebound.

Investment Advice: Balancing Caution and Opportunity

While the bull put spread offers a high-probability trade, investors must remain vigilant. Monitor key support levels and adjust the strategy if CLS breaks below $192.13 or $172. Additionally, consider rolling the spread to a later expiration if the stock stabilizes above $200, extending the time horizon for a potential rebound.

For income-oriented investors, Celestica's combination of earnings strength and technical setup presents a rare opportunity to generate returns in a non-dividend-paying growth stock. By leveraging defined-risk options strategies, traders can align with the company's long-term trajectory while managing near-term uncertainties.

In conclusion, Celestica's strategic pullback offers a calculated entry point for a bull put spread that balances income generation with risk control. As the company navigates its growth in AI infrastructure and hyperscaler markets, this options strategy provides a disciplined approach to capitalizing on its momentum.