Tuesday, August 10, 2010

EchoStar (DISH) - Timely Vol Sale on Event

DISH is trading $18.33, down 2.1% with Iv30™ down 1.4%. The LIVEVOL™ Pro Summary is below.

The company has traded over 6,000 options on total daily average option volume of just 1,991. The action is 2,500 Sep 18/19 strangle sales; Mike Bristow from Vtrader Group helped me hunt this color down. 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 puts are mostly opening (compare OI to trade size).

This is an interesting vol sale based on a recent event. Namely, the stock fell apart from an earnings result. The bet would be that the stock stays put for a month or so. Let's look at the Charts Tab (6 months, click to enlarge) first. 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.

See how the HV jumped after earnings. The strangle sale was @ $1.35 ($0.60 in the puts and $0.75 in the calls). I like this trade small. I don't want to cover up with the Sep 17/20 strangle b/c it feels too expensive (which makes sense, that's why a vol sale looks enticing). Maybe cover this up in a week or so if vol drops; or just close it for a winner if that's the case.

I didn't mention that the HV180™ (long term realized vol) is only 35. This strangle sold ~37.5 vol. If the sale were closer to 40 vol, I'd like it more.

This is trade analysis, not a recommendation.

Legal Stuff:


  1. Could you use a similar strategy on OSTK?

  2. very similar situation; good eye. Strangle sale looks enticing for sure.