Thursday, March 18, 2010

Cintas (CTAS) - Happening Right Now: Options Bet with Earnings After Close

CTAS is trading 27.72 with vol up 6%. Note earnings are today after the close. The LIVEVOL™ Pro Summary is below.

The company has traded over 3,700 options in the first 45 min on total daily average option volume of just 966. All but 111 contracts have been calls yielding a 33:1 call:put ratio. The largest trade has been the Apr 30 calls in unanimity (see below). The Stats Tab and Day's biggest trades snapshots are included (click either image to enlarge).

The Options Tab (click to enlarge) illustrates that the calls are mostly opening (compare OI to trade size).

The Skew Tab snap is included (click to enlarge). You can clearly see the skew for the Apr 30 calls bending up and away (diverging) from the May and Aug 30 calls. In fact, May and Aug upside vol moves down from the ATM, while Apr moves up from ATM.

Finally, the Charts Tab (1 year) is below (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 HV60™ vol difference.

Note that CTAS can move big (and gap) on earnings releases. I have highlighted three times in the last year. Note also a powerful move up in stock since mid Feb in the chart.

It looks like someone is putting on an earnings trade. Since expo. is this Friday (in 2 days) they are buying April for a move after earnings (immediate) and the drift (as it has shown in the past - see chart).

This is trade analysis, not a recommendation.

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