Thursday, October 20, 2011

DELL - Stock Drop, Vol Rise, PC Market Alive?

DELL is trading $14.98, down 5.8% with IV30™ up 10.8%. The LIVEVOL® Pro Summary is below.


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Dell Inc. (Dell) is a technology company that offers a range of technology product categories, including mobility products, desktop personal computers (PCs), software and peripherals, servers and networking products, storage and services.

I found DELL today because of it’s vol pop. There has been some interesting news in the PC market (yeah, there’s still a regular old PC market) based on INTC’s most recent earnings report. Here’s a great review from The Motley Fool:

[INTC] Non-GAAP earnings jumped 33% year over year to $0.69 per share on $14.3 billion in revenue -- a 29% annual boost. Both numbers were comfortably higher than analyst targets [...]

[T]he real shock is the source of this stellar performance. Yep, Intel leaned on regular old PC systems more than on servers or tablets.

[...]Maybe Hewlett-Packard really should hold on to its market-leading PC division after all. Perhaps Dell should reverse course and refocus on consumer systems in the end.

[T]he magic isn't happening in America. The consumer growth is happening elsewhere. "China was up 12%, India 21%, Turkey 14%, and Indonesia 23%," Otellini explained. "China is now the No. 1 PC consumption market in the world, while Brazil has become No. 3."

Source: The Motley Fool, written by Anders Bylund


Let’s turn 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).

Two things that jump out at me:
1. The stock drop today.
2. The vol rise today.

I believe earnings are due out at the end of the Nov expo cycle (on or around 11-15-2011). But, that elevated vol relative to the two historical measures is more a result of today’s stock move than the earnings event.

Let’s turn to the Skew Tab.

A normal lookin’ skew chart with monotonic increases to the front from the back. Also, a similar shape across all months. It’s that elevated Oct vol (one and half day options) that has me interested. The ATM vol in Oct is a touch over 57.

Finally, let’s look to the Options Tab for completeness.

I wrote about this one for (OptionsProfits), so no specific trade analysis here. But, I will say that owning Nov options for less vol than Oct is an interesting position to examine given that earnings should be due out in Nov. Having said that, examining a one and a half day option is really less about vol and simply turns into a one day bet on gamma. Given the 6% decline today, and the real possibility that the market has a spasm in the next day (one way or the other), the short gamma is risky.

On a side note, keep an eye on the EU meeting this weekend. If Germany’s tough talk isn’t just brilliant negotiation tactics, the market could be down...limit... Or not... VIX is 36 and the market is almost unched today -- hmm...

This is trade analysis, not a recommendation.

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1 comment:

  1. Thailand flooding may have something to do with this (hurt supply chain)