Wednesday, March 23, 2011

Pier 1 Imports (PIR) - Calls Trading Ahead of Earnings

PIR is trading $9.58, up 3.2% with IV30™ up 0.7%. The LIVEVOL™ Pro Summary is below.


For a limited time we are offering a FREE real-time trial to Livevol Pro™ for non-professional traders. Click for Free Trial Offer

Pier 1 Imports, Inc. conducts business as one operating segment consisting of the retail sale of decorative home furnishings, gifts and related items... Ya know.. Pier 1...

This is an interesting one due to order flow ahead of earnings on 4-7-2011.

The company has traded 6,561 contracts on total daily average option volume of just 354. Calls have traded on a 385:1 ratio to puts. The action is in the Apr 10 and 11 calls as well as the May 10 calls. The Stats Tab and Day's biggest trades snapshots are included (below).

The Options Tab (below) illustrates that if the trading is one sided, then the calls are mostly opening (compare OI to trade size). When looking down the front months for PIR, I don't see any OI larger than 1,916, so these trades are large.

The direction is a bit confounding, I must say. On all three lines I can see orders which look almost certainly long and orders which look almost certainly short. I'm very curious to see the OI tomorrow -- maybe it will be small (indicating two sided trading)... or not...

The Skew Tab snap (below) illustrates the vols by strike by month.

This is where the confusing order flow persists. It looks like the May 10 line is highest in that month -- so the ATM vol is higher than both sides of the OTM skew.. weird...

The upside in Apr looks flattish rather than downward, so hypothetically that could indicate buying, but then again, the vol in both months in general is up tiny but that could be normal daily perturbations. But, with VIX down, the circumstantial evidence points ever so slightly toward the orders being purchases (i.e. if VIX is down and vol is up in PIR, that could indicate buying orders pushing the vol up in the face of a market with dropping vols).

Finally, the Charts Tab (6 months) is below. The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).

The stock has just bounced around in the same channel for some time. IV30™ is elevated relative to the short-term and long-term historical vols, but by an amount that feels about right with earnings approaching.

Possible Trades to Analyze
For now, just watch. Let's see what happens to that OI. If the bullish orders (or bearish) start piling in, perhaps we can re-examine with a kink (or two) in the skew and analyze some nifty spreads.

This is trade analysis, not a recommendation.

Follow Live Trades and Order Flow on Twitter: @Livevol_Pro

Legal Stuff:

No comments:

Post a Comment