MOT - Options Action; August Bet

Discussion in 'Options' started by livevol_ophir, Aug 5, 2010.

  1. livevol_ophir

    livevol_ophir ET Sponsor

    MOT closed $8.06.

    <img src="http://4.bp.blogspot.com/_hMry1m7UF10/TFq7tuRVKMI/AAAAAAAAD6Q/7nMf2XrFAsE/s1600/mot_summary.gif">

    The company traded 116,000 on total daily average option volume of just 19,008. The action ws in the front month; specifically an ATM straddle sale. The Stats Tab and Day's biggest trades snapshots are included (<a href="http://livevol.blogspot.com/2010/08/mot.html">in the article</a>).

    The Options Tab (<a href="http://livevol.blogspot.com/2010/08/mot.html">in the article</a>) illustrates that the straddle on both sides traded more than OI. With the benefit of seeing the OI this morning (updated), we can see that the call interest went from ~27k ---> ~40k, and the puts from ~8k ---> ~31k. All a fancy way of saying the orders were opening.

    <b>Trade Stats</b>
    Sell 21,600 Aug 8 calls @ $0.25
    Sell 21,600 Aug 8 puts @ $0.19
    So a straddle sale @ $0.44.

    No surprise, I like the trade (when do I not like selling options...). A really cheap cover up could be to buy the Aug 9 calls for $0.02 and the Aug 7 puts for $0.02; not too bad. The win is if MOT is in ($7.60, $8.40) for the next two weeks.

    The Skew Tab snap (<a href="http://livevol.blogspot.com/2010/08/mot.html">in the article</a>) illustrates the vols by strike by month.

    Finally, the Charts Tab (6 months) is below (<a href="http://livevol.blogspot.com/2010/08/mot.html">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.

    We can see that MOT has bounced around a bit, but it may be sticking to $8 after earnings.

    This is trade analysis, not a recommendation.

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