Poet Technologies Experiences Unusually High Call Volume

Poet Technologies (POET) has seen a surge in call volume, with 5,829 calls trading, 1.2x expected, and implied volatility increasing by almost 4 points to 81.19%. The most active options are the Aug-25 6 calls and Jan-26 10 calls, with total volume near 2,200 contracts. The Put/Call Ratio is 0.02, and earnings are expected on August 14th.

Poet Technologies (POET) has experienced a significant increase in call volume, with 5,829 calls trading, 1.2x expected, and implied volatility rising by nearly 4 points to 81.19% [1]. The most active options are the Aug-25 6 calls and Jan-26 10 calls, with total volume near 2,200 contracts. The Put/Call Ratio is 0.02, indicating a strong bullish sentiment among investors. Earnings are expected on August 14th.

The surge in call volume suggests that investors are positioning themselves for a potential price increase in POET's stock. The implied volatility increase of 4 points indicates that investors are anticipating higher price movements. The most active options are the Aug-25 6 calls and Jan-26 10 calls, which are near the expected earnings date and beyond, respectively. This activity suggests that investors are expecting positive news from the company's earnings report.

The Put/Call Ratio of 0.02 further supports the bullish sentiment, as it indicates that there are significantly more call options being traded than put options. This ratio is particularly low, suggesting that investors are confident in POET's ability to deliver positive earnings results.

POET is a small-cap, development-stage, fabless, photonics company that is reportedly nearing the end of a product validation process with at least one customer [2]. The company's interposer technology is unique and is initially targeting the fiber optic pluggable transceiver market. POET's expertise in photonics and III-V materials positions them to potentially participate in adjacent markets such as co-packaged optical modules and even moon-shot trends, such as photonics computing and storage.

The market's small size is counterbalanced by its fast growth, but these contradictory dynamics complicate valuation. POET's ~$500 million enterprise value (EV) isn't particularly small when compared to the company's immediate TAM of $2.5 billion [2]. The company relies on SilTera for fabrication and has deals with Globetronics and Nationgate for assembly and packaging, with a total capacity of 1,000,000 units annually.

POET's key value proposition is low manufacturing costs. Its proprietary interposer platform integrates multiple components of the optical engine, unlike traditional optical transceivers, which can be 100% automated using standard wafer-level packaging. The company estimates that optical modules constitute roughly 50% of the transceiver costs, including packaging.

The company's cost structure seems very reasonable, with annual free cash outflows in the $30 million - $35 million range. Its $6.5 million debt is convertible to about 1 million shares and is manageable in terms of interest expense.

Investing in POET is risky and speculative, making it suitable for investors with high risk tolerance. Management says that commercialization is on the horizon, with some major clients, such as Foxconn, reportedly incorporating the company's interposer technology in future 800 GB and 1.6 T transceivers market launches.

References:
[1] https://www.tipranks.com/news/the-fly/poet-technologies-call-volume-above-normal-and-directionally-bullish-thefly-4
[2] https://seekingalpha.com/article/4805675-poet-technologies-the-market-could-be-smaller-than-you-think