Thursday, February 20, 2014

Gerdau S.A. (GGB) - What's Going On in GGB? Huge Order Flow Ahead of Earnings.

GGB closed Thursday trading at $6.47, up 2.2% with IV30™ up 17.7%. The Symbol Summary is included below.

Provided by Livevol

Gerdau SA is a Brazil-based holding company engaged in the manufacture and sale of steel products.

This is an order flow note right ahead of earnings and oh my goodness, what order flow we have.  But I have to say upfront, sometimes stuff like this happens and it's just nothing at all... Of course, sometimes it is something...

Let's start simple with the Stats Tab for GGB.

Provided by Livevol

The company averages 245 calls traded a day, and today 42,644 calls traded... hello... That's ~175x daily average volume.  And, was this call volume in an interesting strike... yeah, I'd say so...

Let's turn to the Options Tab, below.

Provided by Livevol

We can see that 34,680 Mar 7 calls and 2229 Feb 7 calls traded today.  That $7 strike is the closest OTM strike with the stock closing at $6.47.  Further, those Feb calls are priced at a nickel... huh?... Since this is an ADR, perhaps the earnings release is AMC, which would mean the Feb options may be out of play, but not the Mar options...

The Charts Tab (two-years) is 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 that GGB has been as high as ~11 in the last two-years, and for the record this is an $11 billion market cap company.

Let's turn to the IV30™ chart in isolation, below.

Provided by Livevol

We can see that the order flow (and earnings) have pushed  the implied to multi-year highs.  I have to believe that the Feb options are out of play otherwise the $0.05 is crazy low...

In any case, I have no idea what's going on with GGB, but I know how to count to 42,644.

This is trade analysis, not a recommendation.

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