Heavy, unusual put option volume today in Corning Inc. (GLW) shows some investors believe GLW is cheap after generating strong free cash flow in Q2. The out-of-the-money 6-month GLW short put play is a bullish indicator for these investors.
GLW is down today in midday trading at $124.64. In fact, it's now at a 6-month trough after peaking at $255.69 on June 29. This seems completely undeserved, especially after its strong Q2 results, released yesterday (July 28) before the market open.
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GLW stock - last 6 months - Barchart - July 29, 2026 This article will show why investors are shorting unusually high volumes of deep out-of-the-money puts.
Fundamentally, GLW's underlying fair market value (FMV) and price targets are considerably higher (over 50%). This is based on free cash flow (FCF) projections as well as analysts' price targets (PTs).
Strong FCF Results
Corning is benefiting from strong data center-related and infrastructure capex plans, including two recent deals with Amazon (AMZN) and Nvidia (NVDA) for its fiber optic products.
As a result, revenue was up 17% on a “core” basis and +16.65% on a GAAP basis to $4.5 billion in Q2. Moreover, free cash flow (FCF) was up 223.75% to $1.295 billion, and on an adjusted basis, it was up 215.5% to $1.423 billion.
This can be seen on page 46 of its Q2 deck, where the increase in FCF for both the quarter and the past 6 months is apparent (see table below). I have added the FCF margins in this table, which is important for forecasting purposes.
Corning Inc. - Q2 free cash flow (FCF) - taken from page 56 of the deck, plus Hake analysis of FCF margins It shows that the Q2 adj. FCF margin was significantly higher than last year to 31.6%, and over the past year it was 14.1% (on a non-adjusted basis). Moreover, the TTM FCF margin last quarter was 11.7%.
So, margins are rising as revenue grows. This has huge implications for FCF going forward.
Forecasting FCF
That implies that over the next 12 months (NTM), FCF margins could average at least 23%, or possibly even higher.
For example, analysts now project revenue for 2026 will be $19.2 billion, and in 2027 it will reach $22.86 billion. That's up from $22.51 billion for 2027 last month (as seen in my June 24 Barchart article on Corning).
So, if Corning averages at least a 16% FCF margin (well below my forecast of 23%) in 2027, FCF could rise over 52%:
$22.86b 2027 revenue x 0.16 = $3.658 billion FCF
$3.658b / $2.395b TTM = 1.527
The point is that investors can expect a dramatic rise in FCF over the next 12 months to a year. That could imply a much higher fair market value (FMV) for GLW.
Higher Price Targets
For example, theoretically assuming Corning pays out 100% of its projected FCF, the yield would be over 2.20%, since its market cap is $108.6 billion today (according to Yahoo! Finance):
$2.395b TTM FCF / $108.6 b mkt cap = 0.022
Therefore, using the $3.658 billion forecast for 2027, the fair market value is 54% higher:
$3.685b / 0.022 = $167.5 billion FMV
$167.5b FMV /$108.6 mkt cap = 1.542
That implies the price target is 54.2% higher than today's price:
$124.64 x 1.542 = $192.16 Price Target (PT)
Yahoo! Finance's survey of 16 analysts has an average PT of $215.47, and Barchart's mean survey PT is $219.57. So, analysts are even more bullish on GLW than my FCF-based price target.
That could account for the huge volume in out-of-the-money puts traded today.
Unusual Deep OTM GLW Put Play
This can be seen in Barchart's Unusual Stock Options Activity Report today. It shows over 2,700 puts have traded at the $90.00 strike price for expiration almost 6 months away on Nov. 20, 2026.
GLW puts expiring Nov. 20 - Barchart Unusual Stock Options Activity Report - As of July 29, 2026 The volume is over 13 times the prior number of puts outstanding in that contract. Moreover, the midpoint premium is high at $6.75 per put traded.
That means an investor who posts $9,000 with their brokerage firm can immediately earn $675.00 in their account. In other words, it represents a 6-month yield of 7.50%, or about 1.25% per month. On an annualized basis, the expected return (ER), assuming it can be repeated twice a year, is 15.0%.
Moreover, the investor's only obligation is to buy 100 shares (with the collateral) at $90.00. That is over 27% below today's price. There is less than a 17% chance that GLW will drop to this strike price based on the delta ratio.
It shows that value investors are piling into these puts, shorting them to take advantage of this high-yield play.
Moreover, they would be more than willing to buy into GLW with a breakeven price of $90.00 - $6.75, or $83.25. That implies a 130% potential upside, given my $192.16 price target.
The bottom line is that GLW stock looks cheap here today, and one way to play it is to short OTM puts in longer expiry periods.
On the date of publication, Mark R. Hake, CFA did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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