Wednesday, February 22, 2012

AsiaInfo Holdings (ASIA) - Takeover "Stuff" Opens Skew Diff

ASIA is trading $13.08, up 1.0% with IV30™ up 5.1%. The LIVEVOL® Pro Summary is below.


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AsiaInfo-Linkage, Inc. (AsiaInfo-Linkage), formerly AsiaInfo Holdings, Inc., is a provider of telecommunications software solutions and information technology products and services in China. The Company’s software and services enables its customers to build, maintain, operate, manage and improve their communications infrastructure.

This is a vol note in what has been a gapping stock... A gapping Chinese stock. Let's start with the Charts Tab (six months), below. The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).

On the stock side I have highlighted three moves of late:

11-1-2012: Down 22.1% off of earnings

1-18/19-2012: The stock popped from $8.60 to $9.92 and then to $11.78 in two days. Here's the news:

What: Shares of AsiaInfo-Linkage jumped 19% today after getting a buyout offer.

So what: Power Joy, a subsidiary of CITIC Capital China Partners, sent a proposal letter to the company offering to buy all of the company's shares in an all cash offer. The price wasn’t released, but the company said it "represents a premium over the current stock price."

Source: AsiaInfo-Linkage Shares Popped: What You Need to Know, written by Travis Hoium.

2-21-2012: The stock rose 10.7% to $12.95. Here's that news:

What: Shares of AsiaInfo-Linkage have jumped today, up by as much as 11%, on speculation that the company may be acquired.

So what: According to a Reuters report, several global private equity firms, including well-known names like KKR & Co. and TPG Capital, are considering potential bids for AsiaInfo-Linkage. A possible deal could value the company north of $1 billion.

Source: AsiaInfo-Linkage Shares Jumped: What You Need to Know, written by Evan Niu.

Well, there you go. A buyout offer in a Chinese company from another Chinese company... and then buyout rumors from US companies. Let's turn to the Skew Tab, where the vol diff caught my attention.

We can see the ATM vols are actually quite close, but the OTM puts diverge. It's that vol diff that caught my attention.

Finally, let's turn to the Options Tab for completeness.

We can see the ATM vols 67% vs 63% from the front tot he back. Moving to the 10 strike outs, that vol diff opens to 117% to 88% from the front to the back.

This is trade analysis, not a recommendation.

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