EJ (Chinese Real Estate) - Call Buyer Pushes Summer Vol Past Nov

Discussion in 'Options' started by livevol_ophir, May 27, 2010.

  1. livevol_ophir

    livevol_ophir ET Sponsor

    EZ (a real estate services company in China) is trading 14.42, 3.1% today with IV30™ up 3.9%.

    <img src="http://1.bp.blogspot.com/_hMry1m7UF10/S_6zzPwcv5I/AAAAAAAACoA/q4a0HTaRWGU/s1600/ej_summary.gif">

    The company has traded over 7,000 options today on total daily average option volume of just 1,578. All but 202 contracts have been calls. The action has been in the Jul 17.5 calls (purchases). The Stats Tab and Day's biggest trades snapshots are included (<a href="http://livevol.blogspot.com/2010/05/ej.html">in the article</a>).

    The Options Tab (<a href="http://livevol.blogspot.com/2010/05/ej.html">in the article</a>) illustrates that the calls are opening (compare OI to trade size). You can also see that Jul vol is up 5.4 points while Jun is up just 0.1 and Aug is up 2.0. This pushes the Jul vol to 74.05 which is greater than Aug (71.75) even though earnings are in the Aug cycle (a vol event).

    The Skew Tab snap (<a href="http://livevol.blogspot.com/2010/05/ej.html">in the article</a>) illustrates how the 17.5 line has jumped relative to the other lines. Also note how low Nov is relative to the summer.

    Finally, the Charts Tab (6 months) is below (<a href="http://livevol.blogspot.com/2010/05/ej.html">in the article</a>). The top portion is the stock price, the bottom is the vol (IV60™ is orange, IV30™ is red and HV20™ is blue). The yellow shaded area at the very bottom is the IV30™ vs. the HV20™ vol difference.

    The Jul 17.5 calls went for $0.45 so the trade (if naked) breaks even at $17.95. I've drawn a light blue horizontal line at the 17.5 strike (ish). We can see that EJ has been well above recently. The 52 wk. high is $24.39.

    This is trade analysis, not a recommendation.

    Details, prices, trades, vols, skews, charts here:
  2. Are they the "ReMax" of China? It would be more exciting to use them as a proxy for real estate in China.....to the downside. :eek: :D
  3. livevol_ophir

    livevol_ophir ET Sponsor

    They're actually pretty small so not a good proxy I am guessing... :confused: