Uni-Pixel (UNXL) - Exploding Vol; Collapsing Stock in a Magic Trick - That No One Gets to See

UNXL is trading $15.62, down 21% with IV30™ up 42.3%. The LIVEVOL® Pro Summary is below.




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Uni-Pixel, Inc. (Uni-Pixel) is a production-stage company delivering its Performance Engineered Film (PEF) to the display, touch screen and flexible electronics markets. The Company has developed thin film high volume roll to roll or continuous flow manufacturing process. It focuses to sell its films as sub-components for use in liquid crystal display (LCD) as a back light film and active film sub-component.

UPDATE: Getting many sources telling me that the firm is now showing demonstrations of the technology at several conferences. Check @Livevol_Pro Twitter or StockTwits feed for details.

So this one, is a really interesting story, aside from the stock and vol stuff 'n stuff. It's like a super secret magic trick that no one is allowed to see other than a select group of people who don't seem to agree on what they are seeing.  Here's the scoop on UNXL in general and then in particular to day's stock collapse and vol explosion which has put the implied at all-time highs.

UNXL has a new product called UNI-Boss, which is a touch screen technology. Ok... You can see a little video demo of the product on their website... OK... But, check this out:

---
One of the most interesting things about UniBoss is that very few people have seen the product outside of the limited presentation environment the company controls. Most investors have just seen the demos on the company's website and a few have visited the company. Almost nobody has actually gotten to play with the demo system and the company has, for about a year, refused to give investors samples.

Source: Seeking Alpha via Yahoo! Finance: Uni-Pixel: A Picture Is Worth A Thousand Words, written by Seth Shaw.
---

I repise this quote: "the company has, for about a year, refused to give investors samples."

The author of that article goes on to say that they are one of the few to have actually seen and touched this new product and they have really interesting snapshots to demonstrate the usage. UNXL has sub $1MM in revenue but has a market cap of $200MM which at one point very recently was more than $400MM. This is a spec stock on a spec product which could be huge... or not...

Let's turn to the two-year Charts Tab below. The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).



On the stock side we can see an entity that was trading below $5, to trading over $41 on 4-17-2013.  Since then, the stock has imploded down ~55% in a month and a half.

The headlines driving the recent drops are many, here's a taste:

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May 22, 2013

Cowen & Co.’s Rob Stone this morning reiterates an Outperform rating on shares of touch sensor technology maker Uni-Pixel (UNXL), writing that the 26% plunge in the shares Friday was “significantly overdone,” prompted, he thinks, by a product delay that doesn’t change the company’s fundamental advantages.

Responding to rumors on Friday that a delay in Microsoft‘s (MSFT) next update to Windows 8, Windows 8.1, might postpone shipment of Uni-Pixel’s technology, Stone contends that there’s no change that he can see to the company’s business:

It is logical for the PC OEM partner to delay a new product launch within months of an operating system update. Nevertheless, investors may wonder if there could also be an underlying issue with UniBoss production readiness. However, UNXL stated that first production samples have already shipped, and a payment from the ecosystem partner indicates continued progress.

The “PC OEM partner” is not specified, but as I wrote on Friday, analysts have speculated it is Dell (DELL).

Source: Barron's via Yahoo! Finance: Uni-Pixel: Sell-Off on Rumors Overdone, Says Cowen, Position Intact, written by Tiernan Ray.
---

The news today, oddly, is... I have no idea...

The stock has been falling apparently b/c of the above news / worries. And how much is the worry?... Look at the bottom portion of the Charts Tab. The red line is the IV30™, and we can see how the implied has exploded ever since options started trading in this name. The first day of options trading (12-13-2012) the implied closed at 107%. Today, we're looking at nearly 180%. In English, the option market reflects nearly a double in the future risk of the firm as the stock price has risen and then collapsed. All on a spec product that basically no one gets to see... It's a magic trick! But it might be a real one...

Let's quickly turn to the Skew Tab, below.



We can see how elevated Jun is to Jul.  To me this vol divergence is simply a reflection of the fact that no one has any idea what's going on.  We don't get to see the product... There may even be an earnings event in Jul, though it's not a sure thing.  There may be more news about the product and its distribution, but there may not be.  The stock price drop could be a symptom of short-sellers, but it might not be.  The stock could pop back to the $40 range or fall back sub $10, or it might stay here.  All this in a very short-time period.

Finally, let's turn to the Options Tab, below.



Across the top we can see the monthly vols are priced to 179.77% for Jun and 153.85% for Jul. The Jun07 weeklies are priced just below 200% vol.  So, the option market reflects extreme risk in the equity price in the short-term, and a bit less moving out to the intermediate- and long-term.  We'll see...

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Smithfield (SFD) - Pre-takeover Trades Seem Lucky; In the bad Way... How to Make $1MM in a Week

SFD is trading $32.55, up 25.3% with IV30™ down 64.8%. The LIVEVOL® Pro Summary is below.




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UPDATE (2:36 PM EST): With the stock now trading $1 higher, the profit in eight days is just over $1,000,000 or 1,150% in eight days.
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Smithfield Foods, Inc. produces and markets a variety of fresh meat and packaged meats products both domestically and internationally. It operates in four segments: Pork, Hog Production, International and Corporate, each of which consists of a number of subsidiaries, joint ventures and other investments.

This is a very quick note on what appears to be highly suspicious trading in a takeover name.. yet again, the takeover includes a Chinese public company. First, the news moving SFD today:

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Chinese meat producer Shuanghui International Holdings is looking to purchase Smithfield Foods (NYSE:SFD) for $4.7 billion in a move to feed China’s growing demand for pork.

Should the deal get past what’s likely to be heavy regulatory scrutiny, it could become the largest Chinese takeover of a U.S. company. The deal would be a landmark move in China’s efforts to expand its booming economy outside the country’s borders. Shuanghui has offered to pay $34 a share for Smithfield, an offer that’s 31 percent more than Tuesday’s closing share price.

Source: WALL ST. CheatSheet via Yahoo! Finance: Smithfield’s Big Leap: This Little Piggy Goes to China
---

So, OK, a takeover. SFD has averaged ~1,400 call options traded a day over the last three-months. But, on May 21st (eight days ago), the Jul 29 and Jul 30 calls traded ~1,200x and 1,500x respectively -- both were opening purchases. I have included the Time & Sales Tab from Livevol Pro for that day and those calls, below.





We can see the Jul 29 calls were purchased for ~$0.40 and the Jul 30 calls were purchased for ~$0.25.

Let's turn to the options tab as of right now.



The Jul 29 calls are worth ~$3.60 and the Jul 30 calls are now worth ~$2.60.  That would be a total of an $85,000 investment that now shows a paper gain of ~ $750,000 or an 860% gain in eight calendar days.

How fortunate...

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Tesla (TSLA) - This is a New Company; The Paradigm Shift Continues; Part 3 of 3.

TSLA closed Tuesday at $110.33, up 13.7% with IV30™ up 20.6%. The LIVEVOL® Pro Summary is below.



Tesla Motors, Inc. is an electric vehicles and components manufacturer.

This is a follow up to two recent posts, one written on May 9th (three weeks ago) and the other on May 15th (two weeks ago):

5-9-2013
Tesla (TSLA) - Earnings Explosion Spectacle Hides Vol Shift -- This is a New Company -- A Paradigm Shift is Complete

5-15-2013
Tesla (TSLA) - May Skew Stays Parabolic; Vol Diff Opens... And Some Stuff You May Not Have Known...

I have included the symbol summaries at the time of the original posts:

5-9-2013


5-15-2013


Unbelievably, from that post three weeks ago, the stock is up another 50%; just incredible. Here are a few snippets from that post where I claimed that TSLA had turned into a "different" company in the eyes of the market; that the risk paradigm had changed and we could see it just after earnings were released.

---

We can see that while May vol is down 18.3 vol points, Jun vol is up 1.2 vol points... yeah, earnings are out, yet the second month shows higher vol... as does Sep, Dec, Jan '14 and Jan '15. Yeah, across the board outside of the front month, the option market reflects greater risk in TSLA stock from the short-term to the multi-year long term.

This is called a paradigm shift (well, that's what I call it) -- this company is now seen as a riskier entity. That's not bad news, in fact, for TSLA it's based on extraordinarily good news (earnings results). But TSLA is now a different company... and in this case, good for them... next level please...

---

Interesting that I used the phrase "next level" as the stock is now up 50% in three weeks after more than doubling in the first five months of the year. This was a $35 stock to start the year and is now trading well above $100.

Let's take a look at the two-year chart for TSLA as of the close on Tuesday (5-28-2013). The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).



We can see the meteoric rise, and the even more abrupt move of late in one direction : "stock up". TSLA is now a almost a $13 billion market cap firm. Here's another snippet, this one from the post two weeks ago:

---
One quick update before we get going... After I wrote the post on May 9th, I actually walked into a TSLA dealership and spoke to a salesman. He was a shareholder (or so he said). I have no idea if what he said was true, or if it is already common knowledge, but according to him the firm sold 2,600 cars last year, and this year they are going to break 20,000. The cheapest model is $70,000 and the most expensive is $113,00. They are at full capacity -- which according to him was 500 cars per week -- and every car made is to order so production = sales.

Further, at this point TSLA has one version -- one car -- in nine colors (or whatever). They are introducing a new model and... a right hand sided version of the current model (yeah, that would mean Europe). He also said the cars have ~470 HP -- or essentially, they are electric Lamborghinis with 300 miles to the battery charge which costs ~$9 when on absolute empty to recharge (in 8 hours).
---

Now the price move feels quite "bubbly" -- not that TSLA isn't absolutely killing it on the operational front (and earnings front), but my goodness the rise of late doesn't feel driven by fundamentals (it's neither steady but upward sloping, nor is it one big pop) but rater momentum (several consecutive weeks of upward movement). I just wonder, will this company become the next GM (the good GM, not the bad GM)?

I have included the one-year IV30™ chart in isolation, below.



We can see the pattern I made reference to in the earlier posts -- namely, even after earnings, the implied has started to climb again. In my opinion that means the firm has moved into a new risk paradigm -- i.e. a higher risk firm. Could it just be short-term? Yeah, could be. Could it just be put buyers (to hedge) and call buyers (to spec) as the stock leaps? Yeah, could be. Do I think that's the only part of the story? No, I don't. And why not?... Again, it's the longer-term implied vols that have my attention.

Let's turn to the Options Tab,for completeness.



Across the top we can see tat Jun vol is in the 90% range and rose nearly 17 vol points today (5-28-2013), alone. But look at Jul and Sep (and even Dec and Jan '14). All above or near 80%. Keep in mind, as of 5-5-2013 (so 23 calendar days ago), all of those monthly vol levels (including Jan '14) would have been above the annual high in IV30™. Again, the firm is ow different -- changed... like I wrote about AAPL.


4-23-2013
AAPL - Earnings Preview – Some Things You May Know, and Some You Do Not"

4-18-2013
Apple (AAPL) - This Just Isn't the Company it Used to Be... And it Never Will Be Again."

1-23-2013
Apple (AAPL) - "Just the Facts Ma'am" -- Well, that Supports the Opinion: "Everything has Changed. The Old AAPL is No More."

12-10-2012
AAPL - Everything has Changed. The Old AAPL is No More. The New AAPL is a Riskier Entity and the Market Doesn't Know What that Means Yet

12-5-2012
Apple (AAPL) - Have We Moved into a Totally New Volatility Paradigm for This Company? Has Everything Changed?

But this time, the stock is rising... a lot...

Hello TSLA, where are you going now?...

This is trade analysis, not a recommendation.

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Cobalt Int'l (CIE) - Vol Breaches Multi-Year Lows; Vol Rises Monotonically in Future

CIE is trading $26.69, up 0.8% with IV30™ up 5.9%. The LIVEVOL® Pro Summary is below.



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Cobalt International Energy, Inc. is an independent, oil-focused exploration and production company with a salt prospect inventory in the deepwater of the United States Gulf of Mexico and offshore Angola and Gabon in West Africa.

I found this stock using a real-time custom scan. This one hunts for depressed vols. What I note specifically about this name is that the vol is now breaching multi-year lows.

Custom Scan Details
Stock Price GTE $5
IV30™ GTE 20
IV30™ Percentile LTE 10
Average Option Volume GTE 1,200

The two-tear CIE Charts Tab is included (below). The top portion is the stock price the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).



On the stock side we can see the incredible run up in the price from Dec 2011 to Feb 2012. In that three-month(ish) period the stock rose from a low of ~$8.80 to a high of $31.70 or a 260% rise. Since then, however, the stock has found a sort of quiet0period . In fact, one-year ago the stock closed at $23.23.

But, this is a vol note, so let’s take a closer look at the IV30™ in a two-year isolated cart.



Check out that drop in the implied. It has fallen from highs of over 115% to now multi-year lows in the 33% range. It’s that vol level that caught my eye especially considering the industry.

Finally, let's look to the Options Tab (below).



Across the top we can see the monthly vols are priced to 30.88% for Jun, 38.37 for Jul and 46.97 for Oct, so an interesting monotonic increase vol as we go further out. A big part of that vol increase is due to earnings releases, but still, the option market seems to be picking up on his depressed short-term vol. Very interesting vol evolution and price discovery…

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MBIA (MBI) - Vol Implodes to Multi-year Lows; Is This a New Company Now that BAC Settlement is Over?

MBI closed on Thursday at $14.80, up 1.2% with IV30™ down 4.8%. The LIVEVOL® Pro Summary is below.




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MBIA Inc. (MBIA) together with its consolidated subsidiaries, operates the financial guarantee insurance businesses in the industry and is a provider of asset management advisory services. These activities are managed through three business segments: United States public finance insurance, structured finance and international insurance, and advisory services.

I found this stock using a real-time custom scan. This one hunts for depressed vols. But what we see here on the vol side is truly breathtaking.

Custom Scan Details
Stock Price GTE $5
IV30™ GTE 20
IV30™ Percentile LTE 10
Average Option Volume GTE 1,200

The two-year MBI Charts Tab is included (below). The top portion is the stock price the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).



On the stock side we can see that the price has risen from just under $9 to now just under $15 in two-years. More myopically we can see that massive gap up recently on 5-6-2013 from $9.83 to $14.29 or a 45% rise in one day. Here's the news that drove that stock reaction:

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Shares of bond insurer MBIA soared Monday on news that it has reached a settlement with Bank of America in a long-running dispute over who would be on the hook for faulty mortgage securities issued during the U.S. housing boom.

MBIA will receive $1.6 billion in cash from Bank of America and a $500 million line of credit as part of the settlement, which awaits approval from New York state regulators, the companies announced Monday.

Source: CNN Money via yahoo! Finance: MBIA soars 45% on reports of BofA settlement, written by Chris Isidore.
---

So that was hugefor MBI, no doubt. But, let's take a closer look at the vol. I have included the two-year IV30™ chart in isolation below.



We can see a multi-year high in the implied of over 130% and as of this writing (close on Thursday), the options reflect the lowest risk in two-years with IV30™ closing at just over 40%. Wow...I know earnings just came out, and I know they are now cash rich, solvency isn't an issue, blah, blah, blah, but that is some low vol for MBI.

Of course, there is totally reasonable argument that MBI, now that the BofA case is settled, is a totally different entity. Literally, totally different risk paradigm now-- where solvency issues are a thing of the past, and the firm can now be judged on it's business model rather than it's liquidity crunch. it's an interesting perspective either way:
(1) MBI vol is waaaaay too low
(2) We have no idea what MBI vol should be, and perhaps it's more like a 20%-30% vol firm now that this news is done and dealt with.

Finally, let's look to the Options Tab (below).



Across the top we can see the monthly vols are priced to 40.04% for Jun and 39.99% for Jul. So, this is kind of the new normal for MBI, I guess... I guess... I guess?

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Saks Inc (SKS) - Cheater or Shrewd Trader? 600% in 29 seconds.

SKS is trading $15.67, up 14.6% with IV30™ up 40.6%. The LIVEVOL® Pro Summary is below.



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Saks Incorporated is a department store retailer. The Company, and its subsidiaries, is engaged in the operation of Saks Fifth Avenue (SFA) stores and SFA e-commerce operations (Saks Direct), as well as Saks Fifth Avenue OFF 5TH (OFF 5TH).

This is a very quick note on some suspicious trading... By suspicious I mean thousands of call purchases in the front month 30 seconds before the close yesterday. And I do mean literally 30 seconds before the close.

Many thanks to Doris Frankel from Reuters for the heads up on this one.  If you don't follow her, you are missing out.  For that matter, the same goes for Cecile Vannucci, Nik Gammeltoft and Jeff Kearns from Bloomberg and Kaitlyn Kiernan at Dow Jones.  You should be reading their stuff daily IMHO.

First, the news moving SKS:

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Saks Inc. shares surged 14% to $15.58 on Wednesday after reports surfaced late Tuesday that the high-end department store chain has hired Goldman Sachs to explore strategic options, including a potential sale.

Source: MarketWatch via Yahoo! Finance: Saks explores a sale; how much is it worth?, written by Andria Cheng.
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OK, here's the pre-market close trading from yesterday in the Jun 13 and 14 calls. Note the time stamps (EST):





Uh huh....

And here is the Options Tab right now.



So the June 14 calls went from $0.30 to $1.85 and the Jun 13 calls went from ~$0.85 to $2.70.  That's more than 6x and 3x the purchase prices, respectively purchased 21 seconds pre-close in the Jun 14 calls and anywhere from 31 - 50 seconds pre-close in the Jun 13 calls. OK...

The question remains, was this a cheater or a very shrewd trader that was reading the headlines and digesting them faster than everyone else?  Usually when I ask that question I'm being facetious, this time, I actually mean it -- it's ambiguous.  Check out the news from the NY Post -- their website has a story posted 3 min after the close yesterday... Hmmm...


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UPDATE: It looks like the NY Post did tweet a message with the news 8 minutes before the close, so this was in fact a shrewd trader. Very well done and very legal.
---

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Rackspace (RAX) - Stock Down 50% on Back-to-Back Earnings Collapses, But What About the Vol?

RAX is trading $38.56, up 1.5% with IV30™ up 7.9%. The LIVEVOL® Pro Summary is below.




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Rackspace Hosting, Inc., is the open cloud company. The Company offers a diverse portfolio of cloud computing services, including public, dedicated and private cloud, and hybrid hosting.

I found this stock using a real-time custom scan. This one hunts for vol gainers on the day. I note this stock actually not so much of the vol pop today, but b/c the vol is so low relative to its annual history while the stock has been cascading lower. So this is a vol pop note on a depressed vol stock.

Custom Scan Details
Stock Price GTE $5
IV30™ GTE 30
IV30™ Percent Change GTE 9
Average Option Volume GTE 1,200
IV30™ Change GTE 7

The two-year RAX Charts Tab is included (below). The top portion is the stock price the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).



On the stock side we can see the abysmal return since the stock hit a multi-year high in late Jan of this year. Since then the stock has fallen from over $81 to now $38.66, or a 52% drop in five months. We can see two large gaps down in that short-time period, both right after earnings releases. I do note that consecutive earnings releases have resulted in a large stock drops.

But then we look at the implied vol (the red curve in the bottom portion of the chart) and note how depressed it is to its own history as well as how depressed it is to the two historical realized vol measures (HV20™ in blue and HV180™ in pink).

I have included the two-year IV30™ chart in isolation, below.



Here’s what surprises me. While it’s normal that vol rises and then falls into and out of earnings, this is not a “normal” situation. The stock continues to fall off of bad news from earnings in the trading following the news and has continued to fall (excluding today) from its $80 high price. The IV30™ is now trading in the 22nd percentile with respect to the last year – in other words, the vol is depressed to its own history. In my mind, the implied is remarkably low given the recent stock movement and uncertainty (i.e. gaps down off of earnings reflect “surprises” = risk).

Finally, let's look to the Options Tab (below).



Across the top we can see Jun vol is priced 44.42% and Jul vol is priced to 41.21%, so Jul vol is even lower than Jun. That feels… low, right?... or not?

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Synta Pharma (SYNTA) - Vol Explodes to Event Due out Soon; But Skew is Highly Irregular.. What Does that Mean?

SNTA is trading $7.52, up 1.2% with IV30™ up 2.2%. The LIVEVOL® Pro Summary is below.



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Synta Pharmaceuticals Corp. is a biopharmaceutical company. The Company is focused on discovering, developing, and commercializing small molecule drugs to severe the medical conditions of the patients with cancer and inflammatory diseases.

This is a vol note on a tiny bio-tech (in terms of revenue) that clearly has an event due out within Jun expiry. We can examine the vol and then I'll show you the phenomenon that really caught my eye. It's quite odd in these types of situations and is an interesting perspective to analyze.   For a company with $150K in revenue but a market cap of over half a billion dollars, yeah, there's some risk.

Let's start with the two-year SNTA Charts Tab below. The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).



On the stock side we can see that the equity was trading in the $ range less than two years ago, reached the $12 range earlier this year and has taken a rather abrupt drop from those highs to now ~$7.50. The stock is down 27% in May.

On the vol side we can see the IV30™ (the red curve) rocketing higher of late. In mid March (after earnings), the options were trading at 60% IV30™. In the last two months that level has risen more than 200%. Without reading a single piece of news we know a potential enterprise changing event is coming very soon.

I have included the three-month IV30™ chart in isolation below to better illustrate the vol rise.



Again, we see this in bio-techs when a study result or FDA ruling is due out. This isn't uncommon (though it is interesting). The weird part lies hidden in the skew. let's turn to the SNTA Skew Tab, below.



Here it is.. We see that the front month (red curve) is trading well above the second month (yellow curve), so the event is due out in this expiry rather than next (or so reflect the options). But, checkout that skew shape for Jun -- it's an upside down (negative) parabola, where the option market reflects less risk to the OTM options than the ATM options. In English, in particular to the upside, the option market reflects less likelihood of a large upside move than a small move (or even a downside move). Normally we see parabolic shaped skew in the other direction -- that is, OTM options on both sides show more risk than the ATM options reflecting two-tailed risk, or in English, the option market reflects ~equal possibility of really big bad news or really big good news.

I have included just one example of this parabolic skew below. This is for DNDN (another bio-tech) on 2-27-2012.



Noe how the skew is a right-side up (positive) parabola.  Again, this is more normal -- where the upside and downside OTM options reflect two-tailed elevated risk.

Finally, let's turn to the Options Tab.


Across the top we can see that Jun vol is priced to 190.83% and Jul vol is priced to 156.285 -- again, Jun is the month with the vol event.  For a company with $150K in revenue but a market cap of over half a billion dollars, yeah, there's some risk.

Finally, let's look to the Options Tab (below).

This is trade analysis, not a recommendation.

SunPower (SPWR) - Vol Diff Opens; Upside Skew Diverges in Front as Stock Moves 500+%

SPWR is trading $22.01, up 4.5% with IV30™ up 12.9%. The LIVEVOL® Pro Summary is below.



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SunPower Corporation is a vertically integrated solar products and services company that designs, manufactures and delivers solar electric systems worldwide for residential, commercial and utility-scale power plant customers.

I found this stock using a real-time custom scan I built that hunts for calendar spreads between the front two monthly expiries. Combine this skew with an enormous stock appreciation of late and we have a very interesting story.

Custom Scan Details
Stock Price GTE $5
Sigma1 - Sigma2 > 7
IV30™ GTE 30
Average Option Volume GTE 1,200

Let’s start with the Skew Tab to examine the month-to-month and line-by-line vols.



There are two phenomena that caught my eye here.

(1) Obviously, Jun vol is well elevated to Jul (the red curve is above the yellow curve)
(2) May vol shows an upside skew reflecting greater risk (potential) to the upside than to the downside. This is not normal skew, though for firms in the solar industry, it’s not “unusual.” The point is, the vol diff grows substantially large between the two months as we move to OTM calls.

The one-year SPWR Charts Tab is included (below). The top portion is the stock price the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).



Just look at that stock chart, it’s incredible. At point during the last year, this was a $3.71 stock and it’s now trading nearly 6-fold that price. The upside skew in May reflects this upside risk (potential). The overall vol pop today has put the IV30™ for SPWR in the 75th percentile on an annual basis, but if we look at the bottom chart (the vol char) we can see that in fact the red curve (IV30™) is right about in line with the two historical realized vol measures. In English, the implied, though I’s popping today, feels about “fair.”

Finally, let's look to the Options Tab (below).



Across the top we can see that May is priced to 89.66% while Jun is priced to 80.49%. But this isn’t a story about a 9 point vol diff from month-to-month. Check out that upside, for example the May/Jun 29 call spread. That shows ~17% vol diff. The option market reflects near-term upside risk in SPWR and from the stock chart, I can see why.

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Solarcity (SCTY) - Stock Explodes, Vol Explodes -- One Makes Sense, the Other, Not So Much...

SCTY is trading $44.88, up 25.8% with IV30™ up 29.9%. The LIVEVOL® Pro Summary is below.



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SolarCity Corporation (SolarCity) is engaged in the design, installation and sale or lease of solar energy systems to residential and commercial customers, or sale of electricity generated by solar energy systems to customers.

This is a vol and price note on a stock that is exploding today. Let's start with the news:

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Wall Street’s major banks continue investing in the clean energy sector, with The Goldman Sachs Group, Inc. (GS) the latest to jump on the bandwagon. Goldman entered into a deal to finance approximately 110 megawatts (MW) rooftop solar power generators of Calif.-based SolarCity Corporation (SCTY). The combined lease financing agreement for homeowners’ rooftops is worth $500 million, and is the biggest deal to be announced in the U.S.

The agreement began in 2012 and extended as per its initial terms, to April-end. The deal has already helped achieve 26 MW of solar generation. Further, it is expected to generate an additional 158 MW as of May 10, 2013.

Source: ZACKS via Yahoo! Finance: Goldman Invests in Solar
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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).



On the stock side we can see that the price hit a low of $9.20 over the last year and as of this writing is trading nearly 500% of that level.  The news today is big -- perhaps the most telling part is this reprise: " The combined lease financing agreement for homeowners’ rooftops is worth $500 million, and is the biggest deal to be announced in the U.S."

But it's actually the vol that has my attention, so let's turn to an isolated IV30™ chart, below.



We can see how elevated the implied got into the last earnings cycle (the blue "E" icon), and then the obligatory vol crush.  The news today has pushed the vol right back to the peak ahead of earnings.  Here's the thing... The news is out... It seems to be unambiguous.  Goldie is a reputable name -- I don't think there is a doubt about the investment actually happening... Agree so far?

OK... Well, if you do... Then why is the vol exploding today?  Or said differently, why is the vol at an all-time high?  What is "unknown?"  Yes, this investment seems to be valuation changing (duh), and yes, it's a big deal... but that's not what vol measures, that's what the equity price measures.  I must say, this is a bit confounding to me.  Then I looked to the Skew tab, and got more confused...



So Jun is elevated to Jul, that makes sense.  But what is a little weird is.. the skew is normal.  Yeah, it's weird to me that a firm up 400% in a year and 25% in a day with vol at all-time highs on the largest investment of its type ever from Goldie has no upside skew at all.  No parabolic (two-tailed) risk reflected by the option market... Just normal, "hoe hum" skew.  What?...

Finally, let's turn to the Options Tab.



Across the top we can see that Jun vol is priced to 126.90% and Jul is priced to 114.54%.  Man that seems high... ya know, or not?...

FULL DISCLOSURE: I hold a small short vega position in SCTY in Jun.

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