Monday, March 14, 2011

Star Scientific (CIGX) - Follow up: "Most fascinating story I have ever read"

This is a second follow up to something that I described on March 25, 2010 as, "simply the most fascinating story I have ever read related to finance."

You can read the first follow up here:
CIGX - 450% Run up - The story behind the story - behind the story

CIGX closed Friday up 24.5% to $2.95. In pre-market, it's trading over $3.30. The LIVEVOL® Pro Summary is below.


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Star Scientific, Inc. (Star Scientific) is engaged in the development of very low-tobacco-specific nitrosamines (TSNA), non-fermented smokeless tobacco products. The Company is also engaged in the development, implementation and licensing of its technology for the curing of tobacco so as to prevent the formation of carcinogenic toxins present in tobacco and tobacco smoke, primarily the TSNAs and manufactures, sells, markets and/or develop very low-TSNA dissolvable smokeless tobacco products, including ARIVA compressed powdered tobacco cigalett pieces and STONEWALL Hard Snuff and modified risk tobacco products.

The link to the article that blew my mind in 2009, is here (a MUST read for the intellectually curious):
Largest U.S. Patent Infringement Case Ever is Controversial Too

On Friday, the company traded 48,436 contracts on total daily average option volume of just 2,741. Calls traded over 17,000x for a nearly 16:1 ratio to puts. The Stats Tab and Day's biggest trades snapshots are included (below).

The Options Tab (below) illustrates the action. Note that Mar was up more than 50 points on Friday and April was up more than 44.

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

So on Friday, the upside in Mar was super bid, while Apr skew in general was flat. I would have expected the skew to have been parabolic in April, but... I would have been wrong.

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).

Pretty eye popping for sure -- the stock has exploded and the IV30™ has joined the ride. I wonder what else is on the horizon for this "little guy"... Or .. is it soon to be a "big guy?"

This is trade analysis, not a recommendation.

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