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Qihoo 360 Technology Co Ltd (Qihoo 360), formerly Qihoo Technology Company Limited, is engaged in the operations of Internet services and sales of third party anti-virus software in the People's Republic of China.
This is a vol note in a stock that is on the rise with some rather ambiguous news at times surrounding board independence. Let's start with the Charts Tab (six months), below. The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).
Check out the stock performance of late. This was a $16.20 stock on 2-16-2012 and as of this writing is now up 58% from that level. Looking back a bit further, the stock closed at $13.95 on 1-6-2012 -- it's up 83% in less than three months.
On the vol side, we can see how the implied has traded above the short-term historical (HV20™) for the last several months. As of right now, the implied is trading well above both the short-term and long-term historical realized vols. It's this trending implied as the stock has risen that caught my attention. let's look tot he vol comps (below), and then to some... interesting news.
IV30™: 79.76%
HV20™: 48.79%
HV180™: 66.13%
Here's some news from 2-27-2012.
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Qihoo 360 Tech. announced changes to its board committee composition to comply with requirements of the NYSE and SEC
Co announced changes to its board committee composition to comply with requirements of the NYSE and SEC with respect to the independence of board committee members. Ms. Vivian Wenjiang Chen will replace Mr. Xiangdong Qi, president of the Company, on the audit committee of the board of directors of the Company. Ms. Chen also serves as a member of the corporate governance and nomination committee, and has been a member of the board of directors since September 2011. Mr. Hong Chuan Thor will replace Mr. Hongyi Zhou, chairman and chief executive officer of the Company, on the compensation committee. Mr. Thor also serves as the chairman of the corporate governance and nomination committee, and has been a member of the board of directors since February 2011. Mr. Zhou and Mr. Qi will continue to serve on the board of directors of the Company. The changes to board committee composition were to fully comply with Section 303A of the Corporate Governance Rules of the NYSE and Rule 10A-3 of the Securities Exchange Act of 1934.
Source: Provided by Briefing.com (www.briefing.com)
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Lol... You know what I'm sayin'?
This rather curious news came five days after the company beat earnings and provided upside guidance (Provided by Briefing.com (www.briefing.com)). Did any of that sound like more independence?... Seriously asking here...
On a side note, my company just went through a reorg for greater independence. I made my title the title of the guy sitting next to me, who changed his title to the guy sitting next him. Then I changed the responsibilities of each title to the prior person's responsibilities and changed my dog's name to "dude" (even though she's a girl). Finally, in best efforts to comply with rules, we shaved our two cats and dyed their skin black to match my dog (now named dude). Then we switched the name tags on the collars randomly and it turns out my name is now dude and my dog is a cat. We feel better about the independence in our rule making.
All joking aside, the board has done a phenomenal job of creating wealth for shareholders, so please no offense intended...
Let's turn to the Skew Tab, below.
The skew shape is rather normal and May is priced above Apr (in terms of vol). It's noteworthy that the upside skew is priced "normally," which is to say the upside isn't bid even given the recent upside movement. I looked at the skew over the last three months (day-by-day) and there never seemed to be an upside skew on-close, so the skew today is kinda right in line with the recent past.
Finally, let's turn to the Options Tab.
Looking across the top we can see that Jun is priced to the highest vol across all expiries. The last earnings cycle in calendar Q2 was 5-24-2012. The option markets seems reflect a repeat -- that is, an earnings report in the Jun expiry but outside of May.
Not to be the bearer of bad news (or bad karma), but with the stock up more than 80% in a few months and some "shifts" in board independence (read: transparency), umm... Let's just say that elevated vol makes sense...
This is trade analysis, not a recommendation.
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