Tuesday, August 17, 2010

Focus Media (FMCN) - Vol Seller Everywhere in Sep Pre-Earnings

FMCN is trading $18.06, up 2.1% with IV30™ down 10.5%. The company has earnings in the next few weeks (projected). The LIVEVOL™ Pro Summary is below.

The company has traded over 7,300 options in the first three hours on total daily average option volume of just 2,281. The interest is selling; mostly in Sep. The Stats Tab and Day's biggest trades snapshots are included (click either image to enlarge).

The Options Tab (click to enlarge) illustrates the action and that it's mostly opening (compare OI to trade size).

Before we look to the skew, let's look at the Charts Tab. 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.

Look how the IV30™ has stayed high as the HV20™ has dropped off. There is still a 16 point vol difference even after today's 4+ point drop in IV30™. Note that earnings are due out in 1-2 weeks; probably after this expo.

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

I've highlighted the downside skew. The trades have netted short straddles and short puts. A ~$2 straddle sale in Sep is sitting up there. The stock's 52 wk range is [$8.35,$19.26]. I like that this sells the elevated vol. Not sure about a naked straddle on this one.

This is trade analysis, not a recommendation.

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