Tuesday, July 6, 2010

Dana Holding (DAN) - Betting Bullish After Dive

DAN is trading $9.20, down 3.1% today with IV30™ up 3.9%. The LIVEVOL™ Pro Summary is below.

Dana Holding Corporation (Dana) is a supplier of axle, driveshaft, structural, sealing and thermal management products for global vehicle manufacturers. It designs and manufactures products for every vehicle producer in the world.

The company has traded over 5,000 options on total daily average option volume of just 1,394. The action is in the Dec 15 calls (purchases) and Jul 10 puts (sales). The Stats Tab and Day's biggest trades snapshots are included (click either image to enlarge).

The Options Tab (click to enlarge) illustrates that both the calls and the puts are mostly opening (compare OI to trade size). You can also see Aug vol is elevated to the rest of the months because of an earnings cycle (a vol event).

The Skew Tab snap (click to enlarge) illustrates the vols by strike by month.

It's a pretty normal lookin' skew; note the Dec upside (17.5) actually bend back up a bit, but the Dec 15 calls are the lowest vol in the entire options chain. That's a little weird given the order flow. My guess is that if the flow continues, that vol will rise accordingly.

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.

A few things to note:
1) The stock fell off a cliff a few weeks ago.
2) It had a couple days of "nothingness". (i.e. Chartists may call this, "building a base.")
3)The IV30™ has moved well past the HV20™ (about 75.50 to 60.0)

This stock chart is actually pretty similar to a bunch of stocks in the market right now. The order flow in Dan is a turn to the upside. The real question is, will the market "build a base," or are we headed for another cliff dive. One scenario calls for big vol sales, the other, for big vol purchases. Heads or tails, heads or tails, heads or ....

This is trade analysis, not a recommendation.

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