POET Options: 36,000 Calls Die Friday. Why $8 Is Next

36,000 Calls on a funeral march at 4pm.

Last week the $8.50 wall we flagged for ECOC week never got tested. POET Technologies $POET closed Thursday at $7.75, and Friday's POET options chain is a cleanup, not a fight. About 39,000 calls and 7,600 puts expire at the bell. Roughly 36,000 of those calls sit at $8 and above. Max pain on the Sep 25 chain pencils to $7.50. After the close, the center of gravity moves up to $8, where the Oct 16 monthly carries a straddle of 11,276 calls against 10,215 puts. The cap sits at $10, with 15,670 calls. The gamma map, strike by strike.

The $8.50 Wall Never Got Tested

Monday's ECOC gap ran $POET through $8 on the open. It didn't hold. By Thursday the stock was back at $7.75 and the wall was bigger, not smaller: 13,031 contracts on Sep 17, 13,469 on Monday, 14,247 on Friday's board. The line kept growing into the fade. The setup we laid out Monday called $8.50 the ECOC-week test. The test never came.

That growth explains the fade better than any headline. Dealers short that stack hedge with long stock. Every day those calls sit out of the money, their delta bleeds. So does the hedge. The Greek is called charm, and on a 14,000-contract line it's a steady drip of supply all week. No news required. POET stock lost $8 on schedule, not on a story.

Friday's Cleanup by the Numbers

1. About 39,000 calls versus 7,600 puts expire Friday. A five-to-one skew.

2. Roughly 36,000 of those calls are struck at $8 or higher. Unless $8 gets reclaimed, they're stranded. Same shape as the Sep 18 witching cleanup, just bigger.

3. $7.50 is the only two-sided strike on the board: 2,032 calls against 1,842 puts. Max pain for the chain pencils to $7.50.

4. In-the-money paper is thin. Under 3,000 calls (the $7.50s and $7s) and under 2,000 puts (the $8s, $8.50s and $9s).

5. Our back-of-envelope on the residual dealer hedge against the out-of-the-money stack runs 250,000 to 400,000 shares, depending on the hour. That's a headwind into the close against an 8 million share average day. Not a waterfall.

As we write, the session low is $7.55 and the high is $7.82. The magnet's doing its job.

Dealer Hedging Zones for Friday and beyond

$7.50 to $7.75 is the pin. $8 is the trigger. The 5,071 calls there go from roughly 30 delta to 60-plus on a 25-cent move, so through $8 dealers chase. The fuel runs to $8.50, where the wall sits right on the $8.56 volume point of control. Above $8.50 with hours left is a tail, not a plan. Below $7.50, the 1,869 puts at $7 wake up and the chase runs the other way.

One standing caveat. This gamma map reads dealer hedging with the convention we've run in every POET options piece this summer: retail owns the calls, dealers are short them. Whatever slice of that $8.50 line is covered-call overwrite makes the wall harder. It also turns the close-of-day flow into a small tailwind instead of a headwind.

Where the Roll Lands

Rolling the in-the-money paper barely moves the tape. A 100-delta weekly becomes a 50-to-60-delta October, so the dealer on the other side nets sells 40 to 50 shares per contract. Call it 100,000 shares for the whole call side. Rolled puts do the mirror. Wash. The roll matters for where it lands, not the flow it creates.

Oct 2 is fuel-shaped, not wall-shaped. The biggest line is 3,058 calls at $8.50, and it thins evenly out to $12 from there. Nothing on that board caps POET stock.

Oct 9 is a nothing week. About 4,500 calls, 1,700 puts, wide markets. Rolls skip it.

Oct 16 is where the gamma lives: roughly 54,000 calls and 26,000 puts of open interest through the $12 strike. The $8 line is a straddle, 11,276 calls against 10,215 puts, and max pain on both Oct 2 and Oct 16 pencils to $8. That's the three-week magnet. The $10 line, 15,670 calls, is the cap.

What Moved on the Monthly

Two changes in open interest since Monday's read. The Oct 16 $8 line tilted from calls to puts, with calls down about 800 and puts up about 500. Protection creeping in as $8 failed. And the Oct 16 $10 calls went from 10,960 to 15,670, the biggest add anywhere on the board this week. Same fingerprint as the Oct 2 $10-to-$12 stack, which still holds about 5,800 contracts. Somebody parked the upside bet in the monthly. Protection at $8, conviction at $10.

The Pattern Into October

Once Friday clears, the magnet moves from $7.50 to $8, and $8.50 stops being a wall. Its 14,247 contracts become next week's 3,058. We've seen this setup twice now. Cleanup Friday, Monday travels ($9.65 on Aug 17, the gap through $8 on Sep 21), then the week bleeds back to the pin. If it repeats, the path for POET stock is $8 Monday, thin friction at $8.50, and the real ceiling at $10 on the monthly. Dealer hedging flips from headwind to chase the moment $8 prints.

Monday's open interest prints tell the rest. Watch whether the Oct 16 $8 puts keep growing; that's Thursday's fade getting hedged. And keep an eye on the $10 calls. More adds there means the upside bet is still being built. Same discipline as always: the first tick after a cleanup isn't a verdict. The monthly is. The Q3 print in November is the one after that.

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