TEX - Size Call Buyer is a Skew Hunter

Discussion in 'Options' started by livevol_ophir, Jun 16, 2010.

  1. livevol_ophir

    livevol_ophir ET Sponsor

    TEX is trading $21.05, down 1.6% with IV30&#8482 up 5.3%.

    <img src="http://4.bp.blogspot.com/_hMry1m7UF10/TBjnldF0HOI/AAAAAAAADA4/RIlsJ-4MKY8/s1600/tex_summary.gif">

    The company has traded over 11,400 options in the first hour on total daily average option volume of just 2,754. All but 195 contracts have been calls. The largest trades are call purchases in June and July. The Stats Tab and Day's biggest trades snapshots are included (<a href="http://livevol.blogspot.com/2010/06/terex-tex-call-buyer-hunts-skew.html">in the article</a>).

    The Options Tab (<a href="http://livevol.blogspot.com/2010/06/terex-tex-call-buyer-hunts-skew.html">in the article</a>) illustrates that the calls are mostly opening (trade volume >> OI). You can also see how large this open interest will be relative to the other lines. 5,000 OI in each line is more than 2x any other line.

    The Skew Tab snap (<a href="http://livevol.blogspot.com/2010/06/terex-tex-call-buyer-hunts-skew.html">in the article</a>) illustrates the vols of each line. This is very cool for this trade.

    You can see the vols bought for each month are the lowest of all the strikes. My best guess is this trader looked at the skew before choosing the calls to purchase.

    Finally, the Charts Tab (6 months) is below (<a href="http://livevol.blogspot.com/2010/06/terex-tex-call-buyer-hunts-skew.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 the stock ha been quite a bit higher recently. The 52 wk. low is $10.24 and the 52 wk. high is $28.71. I like the anatomy of this trade relative to the skews purchased. Of course, if TEX doesn't go up, it's a loser.

    This is trade analysis, not a recommendation.

    Details, prices, trades, vols, skews, charts here:
  2. 1) BP is going to announce the purchase of billions of dollars of TEX equipment very soon? :confused:
    2) Instead of "Skew Hunter", a better nickname for this guy would be "Teeny Hunter". :cool:
  3. livevol_ophir

    livevol_ophir ET Sponsor

    What's BP? Wasn't that the oil company that existed a while ago? :D
  4. livevol_ophir

    livevol_ophir ET Sponsor

    The calls are ITM already.