Wednesday, July 24, 2013

GameStop (GME) - Vol Pops. Stock Hits Multi-year Highs, Earnings Approach

GME is trading $43.93, up 3.6% with IV30™ up 11.6%. The LIVEVOL® Pro Summary is below.

I found this stock using a real-time custom scan. This one hunts for vol gainers on the day. But there's a lot more going on here than rising vol on the day.

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

Let's start with the two-year GME 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 that GME is at or near multi-year highs; we're talking four + years. But this is also a vol story, so let's look to the two-year IV30™ chart in isolation.

Before the pop today, we can see that the implied has been trending down almost unabated. Even with the poo today, the implied is trading in the 23rd percentile on an annual basis. Let's add tot he equation that GME has earnings due out near the end of Aug expiry and we see a stock at multi-year highs with depressed vol and earnings approaching.

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

Across the top we can see the monthly vols are priced to 37.95% for Aug and 40.92% for Sep. That vol diff likely points an earnings release just outside of Aug expiry ad in the early portion of Sep expiry -- but that's just a guess. It will be interesting to see if GME continues its upward march in stock price into the earnings announcement and how the vol moves with the stock. Certainly the expectation is substantially higher vol as earnings approach -- perhaps is the first day of many vol pops... Or not...

This is trade analysis, not a recommendation.

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