Monday, June 3, 2013

Iron Mountain (IRM) - Vol Explodes 60% in Ten Days; Stock Turns Down. Will History Repeat Itself? Huge Call Buying in Jun.

IRM is trading $35.07, down 2.1% with IV30™ up 25.1%. The LIVEVOL® Pro Summary is below.


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Iron Mountain Incorporated (Iron Mountain) is engaged in storing records, primarily paper documents and data backup media, and provide information management services. The Company offers records management services, data protection and recovery services and information destruction services.

I found this stock using a real-time custom scan. This one hunts for vol gainers on the day.  But this is also an order flow note -- check out the volume in the Jun 37.5 calls -- those are opening purchase orders .

Custom Scan Details
Stock Price GTE $5
IV30™ GTE 30
IV30™ Percent Change GTE 10
Average Option Volume GTE 1,200
IV30™ Change GTE 7

The goal with this scan is to identify names with rising IV30™ that also have a reasonable amount of liquidity in the options (thus the minimum average option volume) and enough strikes to spread and thus a minimum stock price. I also require a minimum vol level in order to avoid any boring ETFs (or whatever).

The six-month IRM Charts Tab is included (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 we can see how IRM hit a recent high of $39.71 in early May, which is in fact a multi-year high. But then… the stock started falling. In the last two weeks (ish) the stock is down 12% and the vol has decided it’s time to explode.

I have included a six-month IV30™ chart in isolation, below for a more myopic view of the vol.

Check out that explosion in the implied. On 5-22-2013 the IV30™ was 22.77%. Today we’re looking at an IV30™ of over 37%, or a 60%+ rise in just about ten days. That’s certainly an abrupt and noteworthy move especially considering that earnings were released on 5-1-2013, so this vol rise and stock drop are not associated with that news event.

IRM does have a history of huge vol and stock moves – they’re just hidden in a short-term six-month chart. The 52 wk low in stock price is $23.40 and the 52 wk range in IV30™ is [15.84%, 72.46%]. Look at that high number of 70%+ implied. In English, IRM has seen substantially higher vol (risk) so this pattern of late may have legs.

Finally, let's look to the Options Tab (below).

Across the top we can see the monthly vols are priced to 40.11% in Jun and 34.75% in Jul. Again, if this stock drop and vol rise continues, it’s not impossible to see a doubling of vol in a relatively short amount of time based on the history of this stock over the last year.

Also, as i mentioned up font, check out the volume in the Jun 37.5 calls (the green number to the left of that strike).  IRM averages 2,558 calls traded per day in total and has seen over 8,000 Jun 37.5 calls alone traded already.

 This one goes on the watchlist…

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