Monday, June 21, 2010

Liberty Media (LINTA) - Call Buyer, Skew Holds, Stock Can Move

LINTA is trading 12.96, up 4.9% today with IV30™ down 8.4%. The LIVEVOL™ Pro Summary is below.

The company has traded over 5,000 options on total daily average option volume of just 497. All but 5 contracts have been calls. Essentially everything has been the Jul 12.5 calls (purchases). 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 (click to enlarge) illustrates the Jul 12.5 line relative to the rest of the chain. You can see that the skew is not/ has not adjusted. The 12.5 line is still well below the 10 strike. In fact, if you look to the largest trades of the day, the Jul 12.5 call purchases were negotiated inside the NBBO. It's possible these were done with stock (i.e. delta neutral). The stock has traded 5.7 million shares on average volume of 6.5 million; so it's hard to tell just from that.

Finally, the Charts Tab (6 months) 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 IV30™ vs. the HV20™ vol difference.

You can see the stock was well above this level (52 wk. high of $16.80) just a couple of months ago. It bottomed out at ~$10, but a year ago this was a $4 stock (not seen on chart). The IV30™ is trading below the HV20™, the 12.5 strike in July is still low, the stock has been much higher. The trade makes sense in terms of vol and direction. I don't know enough about the stock to decide if I like the directional bet.

This is trade analysis, not a recommendation.

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