Wednesday, May 1, 2013

Allergan (AGN) - Stock Falls Hard off of Earnings; Vol Rises.. But There's More...

AGN is trading $98.95, down 12.9% with IV30™ up 15.2%. The LIVEVOL® Pro Summary is below.


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Allergan, Inc., is a multi-specialty health care company focused on developing and commercializing pharmaceuticals, biologics, medical devices and over-the-counter products. The Company operates in two segments: specialty pharmaceuticals and medical devices.

The news is lower profits and worse "other stuff." Here are a few news snippets:

Allergan Reports Drug Development Setbacks, Lower Profits
Vision-Loss Drug, Hair-Loss Treatment Both Face Delays
Source: via Yahoo! Finance

May 1 (Reuters) - Allergan Inc, maker of the Botox anti-wrinkle treatment, said it will delay late-stage trials of its highly anticipated eye drug Darpin, sending its shares down 14 percent.
Source: Reuters via Yahoo! Finance, written by Esha Dey.

Here's what caught my eye about this one. Sure the shares are imploding, and it certainly is an unusual phenomenon (but not impossible) to see vol rise off of a an earnings release if there is more news to it (which there is in this case). But that's the catch here. Let's take a look at the one-year the Charts Tab below. The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).

We can see how nicely the rises were appreciating since Dec of last year when the stock was ~ $90. Keep in mind that yesterday this was a $114 (ish) stock, so the price saw a ~30% rise in about five months... Then today happened.

But, what is the purpose of the blog today, Ophir? Fair question. Here's the answer, it's in the details of the vol chart in isolation, below.

Vol has been rising of late, OK, point #1. Vol has popped of of earnings, OK, a repeat of a point earlier. But that's not it... this is: Look at the vertical axis... The actual numbers. This was a 23% vol stock pre-earnings, and even now is a 27% vol stock. A stock that has been up 30% in half a year, that is down $15 on earnings today and has forward looking news that is so uncertain that vol has risen off of earnings. What I'm saying is, "What the hell is this stock doing trading at 27%?"

Let's turn to the Options Tab, for completeness.

Across the top we can see the monthly vols are priced to 28.34% in May and 25.67% in Jun. Boy, that feels low... right?...

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