Applied Optoelectronics closed at $113.76, up 0.54%.

A $3.47 million long strangle dominated AAOI’s large-trade flow, with 1,500 October 2026 $120.00 calls and 1,500 October 2026 $100.00 puts both purchased. The structure signals a cautiously bullish volatility play, positioning for a significant move in either direction over time rather than a simple one-way upside bet.

>>>Click to claim your commission-free cards before trading!

Options Indicators

AAOI’s implied volatility stands at 97.37%, but its IV percentile is only 9.96%, which indicates that despite the headline IV looking very high in absolute terms, it is actually sitting near the low end of its own historical range. Combined with an IV/HV ratio of 0.64, this suggests the options market is pricing volatility relatively cheaply versus both its past levels and recent realized movement, so current option premiums appear on the inexpensive side rather than elevated.

The Call/Put volume ratio is 1.65.

Large Trades

A long-volatility combination worth $3.47 million dominated AAOI’s large-trade flow, consisting of a buy of 1,500 October 16, 2026 $120.00 calls and a buy of 1,500 October 16, 2026 $100.00 puts. This is a long strangle entered for a net debit of $3.47 million, with both legs out of the money versus the $113.76 reference stock price. Strategically, this structure points to an expectation of a significant move in either direction over time, with the upside call expressing bullish optionality while the downside put provides bearish protection or downside speculation; overall, it reflects a volatility-focused directional bet rather than premium collection.

Overall, the large-trade tone in AAOI leans modestly bullish, but with an important emphasis on volatility rather than a simple one-way upside chase. The call side was slightly larger than the put side, suggesting traders see somewhat greater upside potential, yet the simultaneous purchase of both wings shows a market participant preparing for a sizable price swing and willing to pay premium for convex exposure. In short, the flow supports a cautiously bullish outlook with elevated expectations for future volatility.

Strategy Reference

For traders seeking a lower assignment probability, selling an out-of-the-money put below the $100.00 strike — such as the October 2026 $80.00 put — may offer a cushion against the expected volatility while still collecting premium; alternatively, a long call spread using the $120.00 and $140.00 strikes could express the bullish lean with defined risk and reduced margin compared with the full strangle.