Friday, June 10, 2011

Eastman Kodak (EK) - July is Coming, and so is the Vol

EK is trading $3.14, down 0.9% with IV30™ up 1.9%. The LIVEVOL® Pro Summary is below.


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Eastman Kodak Company (Kodak) is engaged in the sale of imaging products, technology, solutions and services to consumers, businesses and professionals.

This is a note mostly in reference to vol and to yesterday's order flow, which is the continuation of an accumulated position in July. Mike Bristow of Vtrader Group pointed this one out to me.

Let's start with yesterday's stats and vol (below).

We can see that IV30™ jumped 12.2%. Calls traded on a 4:1 ratio to puts with the action in the Jul 3.5 and 4 calls (more than 18,000 traded). We can see the existing OI in those lines was (is) larger than the trade volume. Let's look to the Options Tab as of this morning.

The OI jumped to 51,210 and 71,039 in the Jul 3.5 and 4 calls, respectively, so the order flow yesterday was the continuation of an accumulated position. I believe that position is long in both calls.

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

It's no secret that EK stock has been collapsing for several years now. Once a Dow component, the company is now bordering on penny stock status (though the market cap is still ~ $800 million). On the vol side, the IV30™ was 66.19 on 5-27-2011 (so two weeks ago). As of this writing, IV30™ has climbed to 96.48, so a 45.7% increase.

Looking to the monthly vols, we can see Jul is 97 (ish) while Jun, Oct, Jan'12 and Jan'13 are in the low sixties. In English, some thing's coming this July -- and the option order flow is getting long that vol and long the deltas.

Possible Trades to Analyze

This is trade analysis, not a recommendation.

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