DISH - Timely Vol Sale on Event

Discussion in 'Options' started by livevol_ophir, Aug 10, 2010.

  1. livevol_ophir

    livevol_ophir ET Sponsor

    DISH is trading $18.33, down 2.1% with Iv30&#8482 down 1.4%.

    <img src="http://2.bp.blogspot.com/_hMry1m7UF10/TGGV9pFQRUI/AAAAAAAAEAk/v3ZGtaUGyjY/s1600/dish_summary.gif">

    The company has traded over 6,000 options on total daily average option volume of just 1,991. The action is 2,500 Sep 18/19 strangle sales; Mike Bristow from Vtrader Group helped me hunt this color down. The Stats Tab and Day's biggest trades snapshots are included (<A href="http://livevol.blogspot.com/2010/08/dish.html">in the article</a>).

    The Options Tab (<A href="http://livevol.blogspot.com/2010/08/dish.html">in the article</a>) illustrates that both the calls and puts are mostly opening (compare OI to trade size).

    This is an interesting vol sale based on a recent event. Namely, the stock fell apart and vol didn't drop off from an earnings result. Let's look at the Charts Tab (6 months, <A href="http://livevol.blogspot.com/2010/08/dish.html">in the article</a>) first. The top portion is the stock price, the bottom is the vol (IV30&#8482 - red vs HV20&#8482 - blue). The yellow shaded area at the very bottom is the IV30&#8482 vs. the HV20&#8482 vol difference.

    See how the HV jumped and IV didn't drop after earnings that much. The straddle sale was @ $1.35 ($0.60 in the puts and $0.75 in the calls). I like this trade small. I don't want to cover up with the Sep 17/20 strangle b/c it feels too expensive (which makes sense, that's why a vol sale looks enticing). Maybe cover this up in a week or so if vol drops; or just close it for a winner if that's the case.

    This is trade analysis, not a recommendation.

    Details, trades, prices, vols, skew, charts here:
    http://livevol.blogspot.com/2010/08/dish.html