LITE Looks Ready for Another Run

The tape has been showing signs that the momentum trade is finding its footing again, particularly in parts of the AI trade that were hit hardest during the June-July deleveraging. One name that has worked through that volatility and is now beginning to print a healthier sequence of higher highs and higher lows is Lumentum Holdings Inc. (LITE), which remains one of the market’s standout YTD performers despite the recent shakeout. The longer-term trend adds another layer to the setup: LITE is signaling a PowerTrend “Buy,” meaning its 1-Month Price remains above its 10-Month SMA — a bullish trend condition that has been in place since May 2025. In other words, the recent rebound is developing within an established longer-term uptrend, giving traders a cleaner way to frame the renewed strength.

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For those looking to participate, there are several ways to approach the setup, from simply owning LITE shares to using options for more defined risk; given the stock’s price above $960, I would favor an in-the-money call debit spread rather than paying the full premium for an outright call. A properly structured spread can provide bullish exposure while limiting the upfront cost and risk, and in the hypothetical setup we’re looking at, the trade offers a potential 72.4% return if LITE is up, flat, or even down as much as 10.0% at expiration — assuming the stated conditions and structure are met. That wider range of potential outcomes is what makes a defined-risk spread particularly interesting here: you do not necessarily need a large upside move for the trade to work.

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Wishing You the Best in Investing Success,