Thursday, December 12, 2013

Goodrich Petroleum (GDP) - Stock Down 40%; Volatility Up 50% to New Annual High. Stock is Now in Play.

GDP is trading $16.88, up 4.1% with IV30™ up 7.6%. The LIVEVOL® Pro Summary is included below.

Provided by Livevol

Goodrich Petroleum Corporation is an independent oil and natural gas company engaged in exploration, development and production of oil and natural gas on properties primarily in Northwest Louisiana, East Texas and South Texas.

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 one has a little sizzle to it -- a dipping stock price which has seen the market cap cut nearly in half in two months as the implied volatility now has breached an annual high.

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 GDP Charts Tab (two-years) 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 $7.95 up all he way to $28.55 in a year.  Whoa... But, Since that high, the stock has fallen all the way back down to sub $17 levels or a 40% drop.  Here's a news snippet from an article authored by after earnings.

The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, generally high debt management risk, disappointing return on equity and weak operating cash flow.

Source: via Yahoo!Finance; Today's Dead Cat Bounce Stock Is Goodrich Petroleum (GDP), written by David Aferiat.

So, not a lot of good things... At the time of the article GDP had already started its slip, closing at $20.58 on 11-6-2013.

But there's more... a lot more... Let's turn to the two-year IV30™ chart in isolation, below.

Provided by Livevol

The blue "E" icons represent earnings dates, so we can see the one on 11-6-2013 (AMC). As we would expect, the volatility dropped post earnings once the news was out.  But, what we would not necessarily expect is the volatility rise from that trough after earnings.

We can actually see IV30™ rise from 60.87% on 11-21-2013 to now 89.36% or a 47% pop... and that's after earnings.  GDP has broken into a new annual high in the implied as of today.

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

Provided by Livevol

Check out Dec vol (yes I know Dec vol is nine days) at 106.80%.. Whoa...Jan'14 vol is at 85.27%.  These are extremely elevated levels for GDP and they do not surround a new earnings release as far as I can tell.

This is trade analysis, not a recommendation.

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