Thursday, August 5, 2010

Motorola (MOT) - Straddle Seller Bets in Aug

MOT closed $8.06. The LIVEVOL™ Pro Summary is below.

The company traded 116,000 on total daily average option volume of just 19,008. The action ws in the front month; specifically an ATM straddle sale. 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 straddle on both sides traded more than OI. With the benefit of seeing the OI this morning (updated), we can see that the call interest went from ~27k ---> ~40k, and the puts from ~8k ---> ~31k. All a fancy way of saying the orders were opening.

Trade Stats
Sell 21,600 Aug 8 calls @ $0.25
Sell 21,600 Aug 8 puts @ $0.19
So a straddle sale @ $0.44.

No surprise, I like the trade (when do I not like selling options...). A really cheap cover up could be to buy the Aug 9 calls for $0.02 and the Aug 7 puts for $0.02; not too bad. The win is if MOT is in ($7.60, $8.40) for the next two weeks.

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

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.

We can see that MOT has bounced around a bit, but it may be sticking to $8 after earnings.

This is trade analysis, not a recommendation.

Legal Stuff:

No comments:

Post a Comment