MTG, PMI - Mortgage Insurers' Order Flow into Earnings

MTG is trading 11.00 with IV30™ up 2.7%. PMI is trading 4.98 with IV30™ up 7.5%. The LIVEVOL™ Pro Summaries are below.





Both stocks shot up nicely at the open - the tick charts are included (MTG and PMI respectively).





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MTG has traded over 10,000 options in the first hour and a half on total daily average option volume of just 3,307. All but 910 contracts have been calls. The largest trades have been the Sep 10/12.5 call spread (purchased). The Stats Tab and Day's biggest trades snapshots are included (click either image to enlarge).






PMI has traded over 4,000 options in the first hour and a half on total daily average option volume of just 904. All but 195 contracts have been calls. The Stats Tab and Day's biggest trades snapshots are included (click either image to enlarge).

The MTG Options Tab (click to enlarge) demonstrates that the Apr call volume is smaller than the OI. A little order flow analysis shows the Apr 7.5 calls are purchases today on top of long OI - the trades today are also opening. The Apr 10 calls are sales today on long OI - these are closing sales. Note also the large OI in some of the other calls.



The MTG Skew tab illustrates the bend upward in the May OTM calls - keep in mind, earnings are in May.



The PMI Options Tab (click to enlarge) demonstrates that the Jun and Sep 5 call volume is smaller than the OI. The same analysis shows these purchases are on top of long OI - the trades today are also opening. Note also the large OI in some of the calls.



Just like MTG - the PMI Skew tab illustrates the bend upward in the May OTM calls - keep in mind, earnings are in May for PMI as well.



Finally, the Charts Tab (6 months) for MTG and PMI respectively are included (click to enlarge). The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue). The yellow shaded area at the very bottom is the IV60™ vs. the HV30™ vol difference.





Note the recent run up in both.

So there are call buyers on high volume, growing OI in some long calls, a bend in the upside earnings skew and a stock run up with earnings to come. A contrarian: "SOLD!" A momentum trader: "BUY 'EM!" Which are you?...

This is trade analysis, not a recommendation.

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