*UPDATE BP - Premium Buyers Push Exploding Vol on New Stock Lows

Discussion in 'Options' started by livevol_ophir, Jun 25, 2010.

  1. livevol_ophir

    livevol_ophir ET Sponsor

    **** UPDATE

    BP is trading $27.07, down 5.8% with IV30&#8482 up 14.0%.

    <img src="http://4.bp.blogspot.com/_hMry1m7UF10/TCT1_bVAeII/AAAAAAAADNY/PzrKP_hmTl4/s1600/bp_summary_6-25-2010.gif">

    This is an update from the blog yesterday:<a href="http://livevol.blogspot.com/2010/06/bp_24.html"><b>BP Plc (BP) - Is Reckoning Day Upon Us?</b></a>.

    I noted yesterday that BP had hit it's 52 wk low of $29 and was hovering just above it. I felt like yesterday was "line in the sand" day, and if it broke the low, it could mean some downward momentum in the stock. Today it seems that in fact BP has broken out lower.

    I wrote:
    You can see the "line in the sand." Is BP going to fall apart (further)? In the short term, it seems like reckoning day will be soon upon us.

    The IV30™ 52 wk. range is [20.05, 117.27]. Note that while the stock is near it's low, the IV30™ is not near its high.

    A few note worthy things today:
    1) Vol is in fact exploding.
    2) The stock has gone through the low.
    3) People are buying millions of dollars of premium, but...

    The surprise is this. See the Stats Tab and day's largest trades snaps (<a href="http://livevol.blogspot.com/2010/06/bp_25.html">in the article</a>).

    While Net Premium is up, you can see it's mostly in the calls. The 5 largest trades so far today are:

    Call Purchase
    Put Sale
    Call Sale
    Call Purchase
    Put Sale

    Yesterday the massive trades were bearish. Interesting how the order flow has turned bullish in options today, as the stock goes down and vol jumps. I would NOT take today's action as a big signal. It has to repeat to change the overall sentiment (in my opinion).

    Finally I have included a full vol chart for the last 6 months (<a href="http://livevol.blogspot.com/2010/06/bp_25.html">in the article</a>). red is IV30&#8482, blue is HV20&#8482. The yellow shaded area is the vol dif (IV - HV).

    Notice that the implied vol is still considerably below the actual movement of the underlying. Hmm...

    This is trade analysis, not a recommendation.

    Details, trades, prices, vols, skwes, charts here:
  2. 1) Is "that" options-related position-squaring before the weekend?
    2) Are you doing anything in any of the 2.5 strike puts? :confused:
  3. livevol_ophir

    livevol_ophir ET Sponsor

    1) not sure

    2) Not me in the bankruptcy strikes... others...