STRI - Lucky Bet or Cheater?

Discussion in 'Options' started by livevol_ophir, Nov 12, 2010.

  1. livevol_ophir

    livevol_ophir ET Sponsor

    STRI is trading $20.41, down 16.8% with IV30™ down 24.7%. The <a href="">LIVEVOL™ Pro Summary</a> is <a href="">in the article</a>.

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    Jeff Kearns of Bloomberg brought this one to my attention and wrote a great article about it, "Bearish STR Options Surged to Record Before Decline."&nbsp; Basically there was some large put buying on 11-8-2010, just a few days before the recent stock collapse. Let's look at the details...

    First, let's look to the Charts Tab (6 months) is <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).

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    It's the stock collapse of late that's in question - or the order flow surrounding it, really. The company averages 166 puts traded a day with average put OI of just 1,482. The relevant portion of the Stats Tab is included <a href="">in the article</a>.

    Now we can turn to the trades on 11-8-2010. I've included the Options Montage from that day and the largest option trades <a href="">in the article</a>.

    So, in total, ~5,000 puts traded in Nov, Dec 25's and Dec 22.5's. That day 5,366 puts traded or ~ 3,800% of the daily average, and whatta' you know?... The stock has gone from ~$28 to $20 or down 28.5%.

    I'll repeat what I told Jeff, for what it's worth:
    "This is highly coincidental at best, and is foul play at worst. I tend to lean to the latter."

    And yes, I did just quote myself, myself... What? It's Friday...

    This is trade analysis, not a recommendation.

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