Monday, December 9, 2013

DISH - Stock Booms to Decade Highs; Risk to Multi-year Highs; Is Market Moving News Coming?

DISH closed Monday trading $54.64, down small with IV30™ popping 4.6%. The LIVEVOL® Pro Summary is included below.

Provided by Livevol

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.

I found this stock using the real-time custom scan that searches for high vols relative to the short-term and long-term historical realized vol.  But this is also a stock note -- a fascinating one.

Custom Scan Details
Stock Price GTE $7 and LTE $70
IV30™ - HV20™ LTE 10
HV180™ - IV30™ LTE -8
Average Option Volume GTE 1,200
Industry isNot Bio-tech
Days After Earnings GTE 10 and LTE 60

The goal with this scan is to identify short-term implied vol (IV30™) that is elevated both to the recent stock movement (HV20™) and the long term trend in stock movement (HV180™). I'm also looking for a reasonable amount of liquidity in the options (thus the minimum average option volume), want to avoid bio-techs (and their crazy vol) and make sure I'm not selling elevated IV30™ simply because earnings are approaching.

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).

Provided by Livevol

On the stock side we can see a remarkable price appreciation from $25.68 two-years ago to now over $54 for a 110% rise.  I've included the DISH two-year stock price chart vs. the indices, below (SPY: yellow, NASDAQ: green, DIA: blue).

Provided by Livevol

So, we have a happy stock and a valuation of just over $25 billion... Did you know that?... I really didn't...

But this is also a vol note, so let's turn to the two-year IV30™ chart in isolation, below.

Provided by Livevol

Now we have an interesting story.  As the stock has been exploding, outpacing all indices and then some, the implied volatility has been rising.  In fact, as of today's close, it's right on an annual high.  Even more odd, check out that volatility rise since the last earnings release (the blue "E" icons represent earnings dates).

The IV30™ has risen from 29.6% on 11-20-2013 to now over 48%.  That's a 62% rise as the stock has risen from $49 on that November date.  Also interesting, note how low the implied got in early March (24.54%). The stock was trading at $35 at that time.  So what's going on with DISH?

Well there are rumors (and have been for a long time) that DISH and DTV (a $36 billion company) could merge.  Morgan Stanley called for some consolidation in the industry and there was that news of CMCSA and CHTR possibly bidding for TWC which could prove to be the beginning of such consolidation.  But... is that really the driver of risk in the next 30 days?... I dunno...

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

Provided by Livevol

Across the top we can see the monthly vols are priced to 48.53% for Dec and 48.08% for Jan'14.  Neither of those expiries have an earnings release, but both are priced above the back months which do have earnings release.

Head scratcher... Watch DISH, DTV and the rest of these guys.  If risk is afoot, market moving news may be as well.

This is trade analysis, not a recommendation.

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