Friday, July 12, 2013

Con-way (CNW) - Stock Breaches Multi-year Highs; Massive Put Spread Bought Ahead of Earnings

CNW is trading $41.71, down 0.4% with IV30™ up 12.7%. The LIVEVOL® Pro Summary is below.

Con-way Inc. and its subsidiaries (Con-way) provides transportation, logistics and supply-chain management services for a range of manufacturing, industrial and retail customers.

This is an order flow note surrounding a company with earnings coming up with a stock price trading at multi-year highs. The company has traded 8,511 contracts on total daily average option volume of just 230. Further, all but 146 contracts traded have been puts, for a nearly 60:1 put:call ratio. The action is almost entirely centered around a purchase of the Aug 40/35 put spread -- and Aug expiry has earnings. The Stats Tab and Day's biggest trades snapshots are included (below).

The Options Tab (below) illustrates that the puts on both sides are mostly opening (compare OI to trade size). When looking down the entire option chain for CNW outside of Jul (which expires today), I don't see any OI larger than 459, so both sides of this trade are very large.  This is pretty clearly an earnings bet (or an earnings hedge).

Finally, the two-year 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).

We can see the stock completely fell apart two-years ago, dropping from $40.17 to a low of ~$20.50 in about three months.  Just recently the stock has surpassed those levels (note the yellow horizontal line that I drew in to help see that the levels today are in fact above the levels two-years ago).

The next earnings date for CNW is 7-30-2013 AMC.  So, earnings are due out in less than three weeks, the stock is at multi-year highs, the vol is starting to rise and a huge (huge relative to this firm's OI and average option volume) put spread was just purchased.  Interesting...

This is trade analysis, not a recommendation.

Legal Stuff:
Options involve risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade options, and must meet suitability requirements.

The information contained on this site is provided for general informational purposes, as a convenience to the readers. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. I am not engaged in rendering any legal or professional services by placing these general informational materials on this website.

I specifically disclaim any liability, whether based in contract, tort, strict liability or otherwise, for any direct, indirect, incidental, consequential, or special damages arising out of or in any way connected with access to or use of the site, even if I have been advised of the possibility of such damages, including liability in connection with mistakes or omissions in, or delays in transmission of, information to or from the user, interruptions in telecommunications connections to the site or viruses.

I make no representations or warranties about the accuracy or completeness of the information contained on this website. Any links provided to other server sites are offered as a matter of convenience and in no way are meant to imply that I endorse, sponsor, promote or am affiliated with the owners of or participants in those sites, or endorse any information contained on those sites, unless expressly stated.

No comments:

Post a Comment