Wednesday, October 19, 2011

Focus Media (FMCN) - Front Month Downside, Back Month to Earnings

FMCN is trading $24.19, down 1.9% with IV30™ down 1.8% as of ~11:45am EST. The LIVEVOL® Pro Summary is below.


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Focus Media Holding Limited (Focus Media) operates an interactive digital media network. The Company offers interactive digital media platforms aimed at Chinese consumers.

Let’s start with 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).

We can see that abrupt stock drop in Sep and an abrupt (but not equal) rebound in Oct. On the vol side, we can see the implied spiked at around the same level as the stock moved, but now has dipped a bit of late.

Let’s turn to the Skew Tab, below.

We can see a monotonic month-to-month vol increase from the back to the front. It’s the front month vol (expiring in 2.5 days) that caught my attention, while also noticing that earnings may be after the Nov cycle – meaning that’s elevated vol relative to a month (Jan) with options.

Let’s turn to the Options Tab for completeness.

I wrote about this one for (OptionsProfits), so no specific trade analysis here. I will say that while the Nov vol is elevated to Jan and very well may not have earnings, it’s still right in between the HV20 and HV180 – so, in a simplistic view, it is about fair value. That Oct downside vol has my attention more than anything and owning Nov in some way isn't necessarily owning expensive vol.

This is trade analysis, not a recommendation.

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  1. in simple words, where do you see it heading using your analysis?

  2. I can't provide advice as I'm not licensed to do so -- in that vein I also don't provide my expectations.