FMCN - Vol Seller Everywhere in Sep Pre-Earnings

Discussion in 'Options' started by livevol_ophir, Aug 17, 2010.

  1. livevol_ophir

    livevol_ophir ET Sponsor

    FMCN is trading $18.06, up 2.1% with IV30&#8482 down 10.5%. The company has earnings in the next few weeks (projected).

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    The company has traded over 7,300 options in the first three hours on total daily average option volume of just 2,281. The interest is selling; mostly in Sep. The Stats Tab and Day's biggest trades snapshots are included (<a href="">in the article</a>).

    The Options Tab (<a href="">in the article</a>) illustrates the action and that it's mostly opening (compare OI to trade size).

    Before we look to the skew, let's look at the Charts Tab (<a href="">in the article</a>). 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.

    Look how the IV30&#8482 has stayed high as the HV20&#8482 has dropped off. There is still a 16 point vol difference even after today's 4+ point drop in IV30&#8482. Note that earnings are due out in 1-2 weeks; probably after this expo.

    The Skew Tab snap (<a href="">in the article</a>) illustrates the vols by strike by month.

    I've highlighted the downside skew. The trades have netted short straddles and short puts. A ~$2 straddle sale in Sep is sitting up there. The stock's 52 wk range is [$8.35,$19.26]. I like that this sells the elevated vol. Not sure about a naked straddle on this one.

    This is trade analysis, not a recommendation.

    Details, trades, prices, vols, skews, charts here: