LINTA - Call Buyer in July

Discussion in 'Options' started by livevol_ophir, Jun 21, 2010.

  1. livevol_ophir

    livevol_ophir ET Sponsor

    LINTA is trading 12.96, up 4.9% today with IV30&#8482 down 8.4%.

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    The company has traded over 5,000 options on total daily average option volume of just 497. All but 5 contracts have been calls. Essentially everything has been the Jul 12.5 calls (purchases). 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 that the calls are mostly opening (compare OI to trade size).

    The Skew Tab snap (<a href="">in the article</a>) illustrates the Jul 12.5 line relative to the rest of the chain. You can see that the skew is not/ has not adjusted. The 12.5 line is still well below the 10 strike. In fact, if you look to the largest trades of the day, the Jul 12.5 call purchases were negotiated inside the NBBO. It's possible these were done with stock (i.e. delta neutral). The stock has traded 5.7 million shares on average volume of 6.5 million; so it's hard to tell just from that.

    Finally, the Charts Tab (6 months) is below (<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.

    You can see the stock was well above this level (52 wk. high of $16.80) just a couple of months ago. It bottomed out at ~$10, but a year ago this was a $4 stock (not seen on chart). The IV30&#8482 is trading below the HV20&#8482, the 12.5 strike in July is still low, the stock has been much higher. The trade makes sense in terms of vol and direction. I don't know enough about the stock to decide if I like the directional bet.

    This is trade analysis, not a recommendation.

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