Monday, December 2, 2013

Krispy Kreme (KKD) - Earnings Out in 3 Hours, But Did You Know This?

KKD is trading $24.62, down 3.0 with IV30™ up 10.4%. The Symbol Summary is included below.

Provided by Livevol

Krispy Kreme Doughnuts, Inc. (Krispy Kreme) is a retailer and wholesaler of doughnuts complementary beverages and treats and packaged sweets.

This is a quick earnings note on KKD which is releasing earnings today AMC (in ~3 hours).  There are two phenomena regarding KKD that I just would not have guessed and when I saw them felt they were worth sharing.

Let's start with the Charts Tab (two-years) below. The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).

Provided by Livevol

First, on the stock side, we can see a remarkable price appreciation from ~$7 two-years ago to now just under $25.  Whoa... Who would of thought a doughnut company would return more than 250% in two-years?...

But there's something much more interesting going on with KKD, and it's the implied volatility.  Let's turn to the two-year IV30™ in isolation, below.

Provided by Livevol

We can see the implied spiking from ~37% in mid October to now over 65%.  But, that's mostly earnings related... What really surprised me is the level of the elevation in the IV30™.  The current level is not only an annual high, but is just on the brink of a multi-year high.  Why is that weird, well how about this:

VIX is down
The market is up
It's Holiday time
KKD price is up

Yeah... Elevated vol into earnings, no problem.  Multi-year highs in volatility into this earnings... Hmm...

Finally, let's turn to the Options Tab.

Provided by Livevol

Across the top we can see tat Dec vol is priced to 73.26% and Jan to 54.73%.  That vol diff is simply the earnings release.  Now the question is, will the earnings release really rock the stock as much as the option market reflects?  I guess we'll see in three hours.

This is trade analysis, not a recommendation.

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