Thursday, July 21, 2011

Motorola (MMI) - Stock Pops, Vol Reaches New High on Patents and NOK/China News

MMI is trading $26.79, up 19.5% with IV30™ up 28.2%. The LIVEVOL® Pro Summary is below.


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Motorola Mobility Holdings, Inc. is a provider of technologies, products and services that enable a range of mobile and wireline digital communication, information and entertainment experiences.

The stock appears to be up for two reasons. Here's a great news snippet with the info:
The stock is up $3.77, or 17%, at $26.18 this morning based on what appear to me to be multiple factors: the value of the patents the company holds in telephony and mobility, and the lackluster results from Nokia’s (NOK) mobile device sales, reported this morning.

MKM Partners analyst Tero Kuittinen writes this morning that “Motorola’s China prospects look now a lot brighter” following Nokia’s report.

Nokia’s handset volumes in China “collapsed by 12.6 million units,” he notes, to 11.3 million units in the quarter.

“This retreat took place at the same time China’s 3G handset sales likely grew by more than 10mn units sequentially. We believe Android OS is now gaining smartphone market share in China by leaps and bounds; and Motorola is the number one Android vendor in China.”


On the patent front, I’ve noted in past that analysts have zeroed in on Moto’s patent value in the wake of the $4.5 billion collectively paid by Apple (AAPL), Microsoft (MSFT), and others for Nortel Networks’s patent collection.

With Nokia today disclosing it gained roughly $620 million in intellectual property revenue in the quarter just ended, in part because of Apple’s settlement with the company, and with wireless patent holder InterDigital (IDCC) seeing its shares rise 70% just this week on the increase in its perceived value, my sense is that Motorola is getting another boost on the perceived value of its intellectual property.
Source: Barron's: Moto Mobility Zooms 17%: Nokia Results, Patent Issues In Focus, by
Tiernan Ray

The company has traded over 48,000 contracts on total daily average option volume of just 3,726. Calls have traded on a 1.7:1 ratio to puts with the Oct 30, Oct 26 and Aug 27 calls the most active. The Stats Tab and Day's biggest trades snapshots are included (below).

The Options Tab (below) illustrates that all three of the most active calls appear to be are mostly opening (compare OI to trade size). The Oct calls appear to both be substantially purchases while Aug is ambiguous if not short.

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

The skew looks generally normal shaped -- while there are some kinks in the front 26 calls and the Sep 25 puts. Generally, not a much upside skew as I would have guessed, though vol is up all the way around with 12.3, 12.4 and 6.4 vol point increases in Aug, Sep and Oct, respectively.

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).

Most notable is the stock and vol pop today. IV30™ is now in the mid 50's which is well above the 52 wk range of [35.62, 50.11]. The IDCC craze feels like it's mostly the culprit, simply b/c of the extraordinary vol now in the MMI options. Patent mania... here we come...

This is trade analysis, not a recommendation.

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