SWY - Call Buyer. Who Believes in Charting?

Discussion in 'Options' started by livevol_ophir, Jun 17, 2010.

  1. livevol_ophir

    livevol_ophir ET Sponsor

    SWY is trading 21.46, with IV30&#8482 down 1.9%.

    <img src="http://2.bp.blogspot.com/_hMry1m7UF10/TBpE4G2pe4I/AAAAAAAADDI/yigLAlqAj7M/s1600/swy_summary.gif">

    Start with the Charts Tab (1 year) (<a href="http://livevol.blogspot.com/2010/06/swy.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.

    Note that SWY has a tendency to rise off of these levels as IV30&#8482 (red line) dips below the HV20&#8482 (blue line). The chart today looks like the stock is turning upward as the IV30&#8482 is dipping - i.e the beginning of a repeated pattern.

    The company has traded over 4,200 options in the first two hours on total daily average option volume of just 1,340. All but 74 contracts have been calls. The largest trades are July and Sep 22.5 calls purchases totalling over 4,000 contracts (i.e. essentially all the volume). The Stats Tab and Day's biggest trades snapshots are included (<a href="http://livevol.blogspot.com/2010/06/swy.html">in the article</a>).

    The Options Tab (<a href="http://livevol.blogspot.com/2010/06/swy.html">in the article</a>) illustrates that the calls in July are mostly opening (compare OI to trade size). I believe that the Sep 22.5 are long OI, but not sure. Also note that earnings are after July expo (projected).

    The Skew Tab snap (<a href="http://livevol.blogspot.com/2010/06/swy.html">in the article</a>) illustrates the vols in the trades.

    Note how low the July vol is relative to the other months. It seems like the projected earnings are in fact correct. i.e. July vol looks low. These trades seem to bet on a repeated pattern into a slow summer month without earnings. It buys low vol (in July) and gets long (I don't think the calls were tied to stock, but can't tell).

    This is trade analysis, not a recommendation.

    Details, trades,prices, vols, skews, charts here:
  2. 1) Buying the stock after a daily decline on "large" volume seems good too. I mean, afterall, SWY is a grocery store chain. How low can it go? :D
    2) Does inserting the analysis and legal stuff statements "protect" you in any way? :confused:
  3. livevol_ophir

    livevol_ophir ET Sponsor

    2) I dunno, I hope so...