Tuesday, August 30, 2011

CoreLogic (CLGX) - Timely Trade or Front Running Insider?

CLGX is trading $11.29, up 28.4% with IV30™ up 47.7%. The LIVEVOL® Pro Summary is below.


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CoreLogic, Inc., formerly The First American Corporation, is a provider of property, financial and consumer information, analytics and services to mortgage originators and servicers, financial institutions and other businesses, government and government-sponsored enterprises.

Jeff Kearns at Bloomberg brought my attention to this one and has a nice article here:
CoreLogic Option Trading Jumped Before Disclosure of Adviser to Weigh Sale

The company is up on this news:

Shares of Central European Distribution Corp rose as much as 40 percent after private investor Mark Kaufman reported a 9.6 percent stake in the Polish vodka maker.
Source: CEDC shares up 40 percent as investor picks big stake

Now here's where it gets... interesting...

The company averages just 134 option contracts traded a day -- of which, just 61 are calls. The Livevol® Pro Stats Tab (a snippet of it) is included below.

Yesterday, the company traded 1,229 options -- all of them were calls, and all but 15 were concentrated on purchases in the Oct 10 and Jan'12 10 calls. Yeah, that's 1,214 contracts on daily average volume of 61, all on the long side, all in the calls, all in the same strike, all OTM. The options montage from yesterday (from the Charts Tab) is included below.

We can see there was some existing OI in both those lines. So, maybe the longs were just closing... right?... I've included the Options Tab snap as of today, below.

We can see the OI went from 720 (yesterday) to 1274 today in the Oct 10 calls. i.e. that's a 554 contract increase (on volume of 555). Similarly, we can see the OI went from 638 to 1238 in the Jan'12 10 calls. i.e. that's a 600 contract increase (on volume of 659).

The vast majority of those trades occurred in a four minute period, from 2:35p - 2:39p EST. At 4:01p the news was released. So, a 2000%+ volume day in two calls on the same strike, less than 90 minutes before an announcement, all done within 4 minutes.

Hmmm... In terms of PnL,this is what I see:

Oct 10 calls: 554 bought for ~ $0.14, are worth $1.80 today. That's 554*($1.80 - $0.14)*100 = $91,964 made on a $7,756 bet.

Jan'12 10 calls: 600 bought for ~ $0.40, are worth $2.30 today. That's 600*($2.30 - $0.40)*100 = $114,000 made on a $24,000 bet.

In total, I see a $205,964 profit on a $31,756 bet or ~650% in 1.5 hours. Nice... or not...

This is trade analysis, not a recommendation.

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1 comment:

  1. love this type of forensic overviews of trade placements!