Thursday, March 22, 2012

EchoStar Communications (DISH) - Government Ruling Pushes Stock to New High; Vol Pops

DISH is trading $33.97, up 5.0% with IV30™ up 17.3% as of ~10:25am EST. The Livevol® Pro Summary is included below.


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DISH Network Corporation is a pay-television (TV) provider, with approximately 13.967 million customers across the United States as of December 31, 2011. The Company offers a range of local and national programming, featuring more national and local high definition (HD) channels than pay-TV providers.

The note today surrounds vol, order flow and news… Let’s start with the information driving the stock and vol higher:

The federal government on Wednesday gave a boost to Dish Network’s plan to create a new U.S. wireless broadband network using satellite broadcast spectrum it bought for $2.9 billion.

The Federal Communications, at a hearing in Washington, D.C., proposed rewriting the rules to let Douglas County-based Dish use the frequencies solely on the ground instead of having to include satellite use of the airwaves, as the current rules for the 40 megahertz require.

FCC Chairman Julius Genachowski, in a written statement, called the proposed changes an important step to relieving the shortage of spectrum for mobile broadband services.


The change would let Dish Network design a mobile broadband network capable of using typical smartphones instead more expensive and bulky devices capable of receiving satellite signals as well as terrestrial ones.

Source: Denver Business journal via yahoo1 Finance, FCC ruling boosts Dish Network’s wireless planswritten by Greg Avery

Well there you go...

Let’s start with the order flow and then move onto the vol – both are a story. DISH has traded nearly 26,000 contracts on daily average volume of just 3,710. Calls have traded on a 4.3:1 ratio puts with over 21,000 changing hands in early morning trading. The Livevol® Pro Stats Tab and day’s biggest trades are included below.

Note in the biggest trades snap that every contract in the top 15 (or whatever) are calls. The Options tab (below) illustrates the action. The Jun 35 and Apr 32 calls are the most active. Apr 37 calls are also active on 0 (zero) existing OI. The largest trade was an Apr / Jun 35 / 32 call spread. I’m having trouble finding color on this one, so I’ll leave it agnostic for now.

The story for me, though, is the vol. Let’s start with the Skew Tab.

The skew shows a similar shape across all three of the front expiries. May is elevated relative to the front and third month. It’s a fair bet that the next earnings release is in the May cycle but outside of Apr based on the last two earnings releases in calendar Q2: 5-10-2011, 5-2-2010.

Finally, let’s turn to 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).

I wrote about this one for TheStreet (OptionsProfits), so no specific trade analysis here. On the stock side we can see the recent spike. The 52 wk range in stock price is [$19.26, $32.76] , or in English, the price level today represents a potential new closing high.

Now, with all that stock stuff and news stuff and stuff ‘n stuff, check out the vol. Although the IV30™ has spiked today, the 52 wk range is [27.38%, 68.03%], meaning the current level, though elevated today, is still just in the 12th percentile (annual). Or, in English, with a bunch of stuff going on, the vol is well depressed. Note that the HV20™ level will pop tomorrow (it’s calculated close-to-close).

This is trade analysis, not a recommendation.

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