NIHD - In play: Puts Trade, Vol Pops for One Day Winner

Discussion in 'Options' started by livevol_ophir, Oct 6, 2010.

  1. livevol_ophir

    livevol_ophir ET Sponsor

    NIHD closed yesterday at $42.77, up 0.7% with IV30™ up 3.6%.

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    I found NIHD on the High Optin Volume scan (compared to average). It traded 1,314% of its daily average yesterday.

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    The company traded nearly 17,000 options yesterday on total daily average option volume of just 1,552. All but 839 contracts were puts yielding a 19:1 put:call ratio. The largest trades were in the Oct 40 puts, where over 10,500 traded. The Stats Tab and Day's biggest trades snapshots are included (<a href="">in the article</a>).

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    The Options Tab (<a href="">in the article</a>) illustrates that the puts are mostly opening (compare OI to trade size). As of this morning the OI jumped to 13,338. I believe the interest to be long. The OI in the Oct 41 puts also went up, so those trades were substantially opening as well.

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

    <img src="" width =500"

    I've highlighted the Oct 40 and 41 lines. We can see a nice skew, rather steep to the downside.

    Finally, the Charts Tab (6 months) is included (<a href="">in the article</a>). The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).

    We can see the stock has jumped as of late from as low as $36 to now well over $40. We can also see that IV30™ has jumped past the short-term realized (HV20™) and the longer-term realized (HV180™).

    With the market open I can see NIHD is now down $1.03, or 2.4% with IV30™ up 5.4% more. Interesting. The Options Tab from right now (~9:35 EST) is included (<a href="">in the article</a>).

    The puts that traded ~$0.40 yesterday are now $0.85 x $0.90. Nice trade - one day 100%+ return.

    <b>Possible Trades to Analyze</b>
    Before doing any of these, check the news. I don't know what's going on, but it feels like someone thinks news is about to come out.

    1. Buy the same puts, copy order flow.

    2. Buy a put spread, maybe Oct 40/38 and pay ~$0.60.

    3. More risky, do a 1 x 2. Something like buy the Oct 40 puts and selling Oct 38 twice for net even. Of course, this is pretty risky and is naked downside and loses dollar for dollar below $36.

    This is trade analysis, not a recommendation.

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

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  2. livevol_ophir

    livevol_ophir ET Sponsor

    NIHD is down $2.47 right now. Those puts are worth $1.2m on $400k bet in one day... lucky... or ???