MDRX is trading $16.40, down 1.2% today with IV30™ up 4.7%. <img src="http://3.bp.blogspot.com/_hMry1m7UF10/TBpnAYq9-TI/AAAAAAAADD4/SnyLAKsjJ-8/s1600/mdrx_summary2.gif"> The company has traded over 23,000 options on total daily average option volume of just 915, whoa! The largest trades were a few minutes a part - Sep 17.5 straddle and Jul 15/17.5 strangle sales tied to $16.33 stock, delta neutral. The Stats Tab and Day's biggest trades snapshots are included (<a href="http://livevol.blogspot.com/2010/06/mdrx.html">in the article</a>). I have also included the stock Time&Sales (<a href="http://livevol.blogspot.com/2010/06/mdrx.html">in the article</a>). Note the "Derivative" Condition. This is the stock that went up with the trades. The Options Tab (<a href="http://livevol.blogspot.com/2010/06/mdrx.html">in the article</a>) paints a clearer picture of what traded (everything was a sale). All of the trades were substantially opening with the exception of possibly the Sep 17.5 calls. <b>Trade Stats</b> Sell 6,645 Jul 17.5 calls @ $0.20 Sell 6,645 Jul 15 puts @ $0.25 Sell 3,323 Sep 17.5 calls @ $0.80 Sell 3,323 Sep 17.5 puts @ $1.90 Sell 106,500 stock @ $16.33 The PnL chart at Sep expo is included (<a href="http://livevol.blogspot.com/2010/06/mdrx.html">in the article</a>). <img src="http://1.bp.blogspot.com/_hMry1m7UF10/TBpnCKeU0BI/AAAAAAAADEY/kblBQslz0uQ/s1600/mdrx_pnl_2.gif"> The expo chart is useful, but it's also a little limiting. This trade is short vol, and it can close for a big win (or loss) well before expo. Let's look at the vega: Sell 6,645 strangles = 6,645*(-.03) = -$21,264/vol Sell 3,323 straddles = 3,323*(-.064) = -$21,267/vol Stock has no vega. Now we can see the trade is in fact a well designed vol sale. Perfectly sized so each trade gets the same amount of short vega. In English, if the vol goes down a point, the strategy wins ~$42,500 (and vice versa). Keep in mind that vega is a function (not a constant), so it changes with vol as well (the second derivative of option price wrt to vol is not zero). The Skew Tab snap (<a href="http://livevol.blogspot.com/2010/06/mdrx.html">in the article</a>) illustrates the vols per strike per month. We can see the July 17.5 calls were the lowest vol of the bunch. Finally, the Charts Tab (1 year) is below (<a href="http://livevol.blogspot.com/2010/06/mdrx.html">in the article</a>). The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue). The yellow shaded area at the very bottom is the IV30™ vs. the HV20™ vol difference. We can see the stock has dropped pretty hard recently. Last time I touched on this stock (an earnings blog), it was over $20, and that was 4-8-2010. The IV30™ (red line) is actually lower than the realized movement (HV20™ is the blue line). This is a big vol position. I'd even call it a "statement." Really interesting. This is trade analysis, not a recommendation. Details, trades, prices, vols, skews, charts here: http://livevol.blogspot.com/2010/06/mdrx.html