Wednesday, July 27, 2011

Williams Companies (WMB) - Vol Explodes

WMB is trading $32.03, up 4.6% with IV30™ up 40.7%. The LIVEVOL® Pro Summary is below.


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The Williams Companies, Inc. (Williams) is an integrated natural gas company focused on exploration and production, midstream gathering and processing, and interstate natural gas transportation primarily in the Rocky Mountains, Gulf Coast, Pacific Northwest, Eastern Seaboard and the Marcellus Shale in Pennsylvania.

The vol is exploding in this company, the volume is 5x the average, but I can't find a company specific story to push those moves. The company has traded over 158,000 contracts on total daily average option volume of just 32,671. Calls have traded on a 3.9:1 ratio to puts, though I believe a lot of that is closing sales. The Stats Tab and Day's biggest trades snapshots are included (below).

The Options Tab (below) illustrates the action. The OI in the Aug 30 calls went down from the mid 70k range today and I believe the sales today will continue to close out that long interest.

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

The skew shapes are quite normal, even pretty. The upside in Aug is bid a little, especially to the 38 and 40 strikes. The real move here isn't skew, it's just the absolute vol.

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 actually tended to move essentially... nowhere. Today there's a pop, but it's the vol move that's impressive. The 52 wk range in IV30™ is [25.72, 44.92], so the pop today pushes WMB well into a new high in vol. Again, I'm not sure about the firm specific news, but this is an interesting one to follow.

This is trade analysis, not a recommendation.

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