GOGO - Volatility Rising, Skew Shifting to Upside; Is GOGO About to Move-Move?

GOGO is trading $24.07, up 0.7% with IV30™ popping up 10.1%. The LIVEVOL® Pro Summary is included below.

Provided by Livevol

Gogo Inc is a holding company. The Company operates through its two operating subsidiaries, Gogo LLC and Aircell Business Aviation Services LLC. The Company provides in-flight connectivity and wireless in-cabin digital entertainment solutions.

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 there is also a compelling skew story here.  In general, the option market reads that GOGO is ready to move-move.

Custom Scan Details
Stock Price GTE $7 and LTE $70
IV30™ - HV20™ GTE 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 GOGO Charts Tab (~7 months) is included below. The top portion is the stock price, the bottom is the vol (IV30™).

Provided by Livevol

On the stock side we can see a very nice price appreciation since IPO, with the stock moving from a close of $16.00 to now ~$24 (or ~a 50% rise in less than a year).  We can also see that at one point the stock saw much higher levels, with an all-time high of $35.77.

But this is a vol note, on two-levels, so let's start with the IV30™ chart in isolation, below.

Provided by Livevol

We can see a rather obvious trend in the IV30™... basically, up.... As of right now, the implied in GOGO is near an all-time high, or in English, the option market reads: "Risk Ahead."  Much of that may be due to earnings, but the trend is not just earnings.  The blue "E" icons represent earnings dates in that chart and we can see the upward trend persists in between those cycles.

But there's something even more compelling going on in GOGO volatility, and we can only see it in the skew.

Below I have included the Skew Tab from exactly one-month ago, and then below that, from today.

Provided by Livevol


Provided by Livevol

Note how the right side of the Skew Chart for 1-6-2014 (the out-of-the-money or OTM) shows higher volatility by strike price than the at-the-money options.  That's actually unusual or "abnormal" skew.  When we look at the skew for 12-6-2013 (a month ago) we can see that the shape is in fact the opposite -- with the OTM puts priced to higher volatility than the at-the-money (ATM) options.

So what?  In English, there is a slight paradigm shift as to how the option market reflects risk for GOGO.  Specifically:

1. It's riskier right now than it has been.
2. There seems to be more upside risk (potential) than downside.

Look for earnings dates, as this can occur with that event.

To read more about skew, what is and why it exists you can click the title below:
Understanding Option Skew -- What it is and Why it Exists.


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

Provided by Livevol

Across the top we can see the monthly vols are priced to 89.93% for Jan and 93.75% for Feb.  That elevated Feb to Jan vol kind of suggests that earnings are not due out in the Jan expiry for GOGO, therefore that upside skew shape is also not due to earnings.

Hmm... A move to come or just elevated volatility?...


This is trade analysis, not a recommendation.

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Legal Stuff:
Options involve risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade options, and must meet suitability requirements.

The information contained on this site is provided for general informational purposes, as a convenience to the readers. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. I am not engaged in rendering any legal or professional services by placing these general informational materials on this website.

I specifically disclaims any liability, whether based in contract, tort, strict liability or otherwise, for any direct, indirect, incidental, consequential, or special damages arising out of or in any way connected with access to or use of the site, even if I have been advised of the possibility of such damages, including liability in connection with mistakes or omissions in, or delays in transmission of, information to or from the user, interruptions in telecommunications connections to the site or viruses.

I make no representations or warranties about the accuracy or completeness of the information contained on this website. Any links provided to other server sites are offered as a matter of convenience and in no way are meant to imply that I endorse, sponsor, promote or am affiliated with the owners of or participants in those sites, or endorse any information contained on those sites, unless expressly stated.

Aegerion Pharma (AEGR) - UPDATE: Stock Gaps, Volatility Explodes... But We Knew This Would Happen on Friday... Didn't We?

AEGR is trading $68.82, down 6.4% with IV30™ exploding up 19.8%. The Symbol Summary is included below.


Provided by Livevol

Aegerion Pharmaceuticals, Inc. (Aegerio) is a biopharmaceutical company focused on the development and commercialization of therapeutics to treat lipid disorders

This is a follow up to the article I posted on Friday (1-3-2014) which specifically noted the rising downside risk in AEGR as expressed by the options. You can read that post by clicking on the title below:

Aegerion Pharma (AEGR) - Calendar Spread Opens; Options Read: Elevated Downside Risk in Short-term

The Symbol Summary from Friday is included below, as a reference.  Note the difference in the stock price and the IV30™.


Provided by Livevol

Here's a quick summary of that post, below:

---
1-3-2014

Let's start with the Skew Tab, below.

Provided by Livevol

I note two things:

1. First, obviously ever strike in Jan is priced above Feb in terms of volatility.
2. Second, that vol difference expands between the two months as we move to the out-of-the-money (OTM) puts. We'll come back to that in a second.

To read more about skew, what is and why it exists you can click the title below:
Understanding Option Skew -- What it is and Why it Exists.

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

Provided by Livevol

While Jan to Feb shows ~12 vol point difference in the at-the-money (ATM) options, check out, as one example, the Jan/Feb 60 put spread.  That shows a vol difference of 94.67% to 76.13% or ~ 18 vol points.  The option market reflects greater downside risk in the near-term for AEGR relative to the medium-term.  That creates a nice calendar vol spread to analyze.
---

And now, back to today.  The stock is down, the volatility is exploding, and how about that skew? Let's turn to the Skew Tab today:


Provided by Livevol

Check out those vol levels relative to the ones in the Skew Tab from Friday (above).  To make it explicit, I have included the Options Tab, for Just January, below.


Provided by Livevol

Explicit comparisons:


Provided by Livevol

So we can see a pretty much across the board rise of 25 vol points in each strike.  Who would have thought the stock would gap down before January 17th (Jan expiry)?... Oh wait...


This is trade analysis, not a recommendation.

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Legal Stuff:
Options involve risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade options, and must meet suitability requirements.

The information contained on this site is provided for general informational purposes, as a convenience to the readers. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. I am not engaged in rendering any legal or professional services by placing these general informational materials on this website.

I specifically disclaim any liability, whether based in contract, tort, strict liability or otherwise, for any direct, indirect, incidental, consequential, or special damages arising out of or in any way connected with access to or use of the site, even if I have been advised of the possibility of such damages, including liability in connection with mistakes or omissions in, or delays in transmission of, information to or from the user, interruptions in telecommunications connections to the site or viruses.

I make no representations or warranties about the accuracy or completeness of the information contained on this website. Any links provided to other server sites are offered as a matter of convenience and in no way are meant to imply that I endorse, sponsor, promote or am affiliated with the owners of or participants in those sites, or endorse any information contained on those sites, unless expressly stated.

Navistar (NAV) - Volatility Breaches Annual Lows; Option Market: Stock Stays Still for Next Two Weeks. Wanna Bet?

NAV closed Friday trading at $37.75, up 1.4% with IV30™ down 2.6%. The LIVEVOL® Pro Summary is included below.


Provided by Livevol

Navistar International Corporation (NIC) is a holding company, whose principal operating subsidiaries are Navistar, Inc. and Navistar Financial Corporation (NFC).

This is a quick note on a stock with implied volatility collapsing to a level almost not seen in a year.  I found this stock using a real-time custom scan.

Custom Scan Details
Stock Price GTE $7
IV30™ - HV20™ LTE -8 GTE -40
HV180™ - IV30™ GTE 7
Average Option Volume GTE 1,200
Industry != Bio-tech
Days After Earnings GTE 32

The NAV 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 see essentially two stories:

1. The two-year return is negative, with the stock closing at $38.77 two-year ago.
2. The one-year return is ~72%, with the stock up from ~$22.

So... you tell me, has it been a good ROI for equity holders....

I'll focus on both time periods, of course, focusing on the volatility.  Let's turn to the two-year IV30™ chart in isolation, below.

Provided by Livevol

Over the last year, NAV IV30™ is trading in the 2nd percentile, after just breaching a new annual low a few trading days ago.  Looking back two years (which is what this chart represents), we can see the implied reached as high as 98.76% and as low as 30.16% all within just four months.

My take today is pretty simple.  This stock can gap - it's up 72% in a year, the implied can go every which way, and the option market reflects less risk now than it has in the last year (basically).  Hmm....

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

Provided by Livevol

Across the top we can see that Jan and Feb vol are priced nearly identically to ~35.5%.  Look at that $38 strike straddle in Jan; it's worth ~$2.  Option expiry is Friday Jan 17... Here's the question: Will NAV be in [$36, $40] in the next two weeks?...

I guess we'll see... For now, the stock does certainly seem to have hit a quiet equilibrium....

This is trade analysis, not a recommendation.

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Legal Stuff:
Options involve risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade options, and must meet suitability requirements.

The information contained on this site is provided for general informational purposes, as a convenience to the readers. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. I am not engaged in rendering any legal or professional services by placing these general informational materials on this website.

I specifically disclaims any liability, whether based in contract, tort, strict liability or otherwise, for any direct, indirect, incidental, consequential, or special damages arising out of or in any way connected with access to or use of the site, even if I have been advised of the possibility of such damages, including liability in connection with mistakes or omissions in, or delays in transmission of, information to or from the user, interruptions in telecommunications connections to the site or viruses.

I make no representations or warranties about the accuracy or completeness of the information contained on this website. Any links provided to other server sites are offered as a matter of convenience and in no way are meant to imply that I endorse, sponsor, promote or am affiliated with the owners of or participants in those sites, or endorse any information contained on those sites, unless expressly stated.

01-03-14: End of Day - New Highs/Lows, Implied Volatility Movers, Option Volume Movers, Elevated & Depressed IV/HV

New 52 Wk Highs in S&P 500



New 52 Wk Lows in S&P 500



Unusual Option Volume




Unusual Volatility Moves




Elevated Implied Volatility (IV) to Historical Volatility (HV)



Depressed Implied Volatility (IV) to Historical Volatility (HV)




This is trade analysis, not a recommendation.

Follow @OphirGottlieb

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Legal Stuff:
Options involve risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade options, and must meet suitability requirements.

The information contained on this site is provided for general informational purposes, as a convenience to the readers. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. I am not engaged in rendering any legal or professional services by placing these general informational materials on this website.

I specifically disclaim any liability, whether based in contract, tort, strict liability or otherwise, for any direct, indirect, incidental, consequential, or special damages arising out of or in any way connected with access to or use of the site, even if I have been advised of the possibility of such damages, including liability in connection with mistakes or omissions in, or delays in transmission of, information to or from the user, interruptions in telecommunications connections to the site or viruses.

I make no representations or warranties about the accuracy or completeness of the information contained on this website. Any links provided to other server sites are offered as a matter of convenience and in no way are meant to imply that I endorse, sponsor, promote or am affiliated with the owners of or participants in those sites, or endorse any information contained on those sites, unless expressly stated.

Inovio Pharma (INO) - Best Performing Bio-tech Last Year Begins to Teeter; Going to Make News This Year, One Way or the Other.

INO is trading $2.55, down 11.0%. The Symbol Summary is included below.


Provided by Livevol

Inovio Pharmaceuticals, Inc. is engaged in the development of a new generation of vaccines, called synthetic vaccines, focused on cancers and infectious diseases. The Company's SynCon technology enables the design of universal vaccines capable of providing cross-protection against existing or changing strains of pathogens, such as influenza and human immunodeficiency virus (HIV).

This one actually doesn't trade options and I almost never write about non option related companies, but there are a few things about this firm that make it worth a quick look:

1. The equity price is nearing the level of an option in and of itself (read: Merton Model).
2. This was the best performing bio-tech in 2013, up more than 400% last year.
3. I haven't seen this much interest in a bio-tech in social media in a long time.
4. It's down today.
5. I'm considering taking a position.

So, here we go with some info on INO. Let's start with The Charts Tab (two-years), below.

Provided by Livevol

So, your eyes aren't deceiving you, there are stock prices in the $0.40 range there.  Anyway, here's the deal with INO, it is a fascinating firm in many respects.  Two news articles kind of do the work for us:

The first article:
Source: TheStreet.com via Yahoo! Finance
Biotech Stock Mailbag: Inovio, Chelsea, Exelixis, Ariad, ImmunoCellular, written by Adam Feuerstein.

---
Inovio is conducting a randomized, placebo-controlled phase II study of its DNA vaccine VGX-3100, which enrolled 148 women with cervical dysplasia, also known as cervical intraepithelial neoplasia (CIN). Results are expected to be announced mid year.

All the women enrolled in the study are confirmed positive for the human papillomavirus (HPV) serotypes 16 and 18, [] which carry a moderate to higher risk for progressing to cancer.

CIN, by itself, is not cancer. These are pre-cancerous cells, which if untreated, might turn into cervical cancer. []

VGX-3100 is a therapeutic DNA vaccine delivered using Inovio's electroporation device. It's designed to produce a T-cell response that identifies and kills cells that have been transformed by HPV into precancerous lesions.

[]

The study's primary endpoint is a comparison of the number of patients with regression of CIN to grade 1 or less at nine months. The secondary efficacy endpoint of the study is the number of patients with clearance of HPV 16 or 18 and regression CIN to grade 1.

I'm an Inovio skeptic, with good reason. The technology upon which the company's vaccine candidates are based is more than 30 years old and has never proven to be effective in clinical trials. Inovio's management team is exceptionally promotional and 85% of the company's stock is held by retail investors, according to S&P CapitalIQ. [Promotional efforts plus speculation plus a raging biotech bull market explain much of Inovio's stellar performance in 2013.]

In September, Inovio and Roche  (ROG) formed a partnership to develop vaccines against prostate cancer and hepatitis B. But the products involved in this deal are both still in preclinical stages of development and Inovio only received a $10 million upfront payment -- which amounts to a penny-sized financial commitment for a company the size of Roche.

---

That was semi-bearish. Here's another article, a bit more bullish (yellow highlighting was added by me):
Why You Should Watch Amgen and Inovio Today, written by George Budwell.

---
So what's driving the share price appreciation? While Inovio has a number of promising pre-clinical and early stage vaccine candidates, my take is that investors are squarely focused on the company's lead clinical candidate VGX-3100. VGX-3100 is a synthetic DNA vaccine being tested in a mid-stage trial as a possible treatment for cervical dysplasia. Inovio is expected to release topline results from the study by mid-2014.

Why is this vaccine worth keeping tabs on? Simply put, VGX-3100's clinical results will either validate the company's entire synthetic vaccine platform, or possibly sink it. So while VGX-3100 could be a blockbuster in its own right due to the size of the potential market, this trial has much broader implications for Inovio as a whole. If the trial is successful, it validates Roche's recent licensing deal with Inovio that could generate up to $422 million in milestone payments, and it would significantly de-risk the company's other clinical candidates for HIV, Influenza, and other cancer types.

My take is that the company's market cap of roughly $600 million is factoring in the significant risk of the upcoming data readout. Other cutting edge vaccine-makers like Novavax, for example, are commanding a much higher premium right now. In short, Inovio still looks cheap based on prevailing sector trends despite its monstrous rise in 2013, but this bargain isn't risk-free. Foolish investors thus might want to keep tabs on this one going forward.
---

My take (not that it matters at all):
Bio-techs at this stage really are pure gambles.  There's a general line I take which is simply that I hope they're all successful at eradicating disease, but hope is worth 1 cent less than a penny in the stock market.  As the price dips (if it continues) it makes the equity price an option in and of itself.  Bet carefully...but watch this one, it' going to make news this year, one way or the other.

This is trade analysis, not a recommendation.

Follow @OphirGottlieb

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Legal Stuff:
Options involve risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade options, and must meet suitability requirements.

The information contained on this site is provided for general informational purposes, as a convenience to the readers. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. I am not engaged in rendering any legal or professional services by placing these general informational materials on this website.

I specifically disclaim any liability, whether based in contract, tort, strict liability or otherwise, for any direct, indirect, incidental, consequential, or special damages arising out of or in any way connected with access to or use of the site, even if I have been advised of the possibility of such damages, including liability in connection with mistakes or omissions in, or delays in transmission of, information to or from the user, interruptions in telecommunications connections to the site or viruses.

I make no representations or warranties about the accuracy or completeness of the information contained on this website. Any links provided to other server sites are offered as a matter of convenience and in no way are meant to imply that I endorse, sponsor, promote or am affiliated with the owners of or participants in those sites, or endorse any information contained on those sites, unless expressly stated.

Aegerion Pharma (AEGR) - Calendar Spread Opens; Options Read: Elevated Downside Risk in Short-term

AEGR is trading $72.51, up 0.2% with IV30™ down 2.0%. The LIVEVOL® Pro Summary is below.


Provided by Livevol

Aegerion Pharmaceuticals, Inc. (Aegerio) is a biopharmaceutical company focused on the development and commercialization of therapeutics to treat lipid disorders. As of December 31, 2011, the Company developed its first product candidate, lomitapide, as an oral, once-a-day treatment for patients with a inherited lipid disorder called homozygous familial hypercholesterolemia (HoFH).

The stock just came up on a real-time custom scan. This one hunts for calendar spreads between the front two months.  Note that this is a bio-tech company.

Custom Scan Details
Stock Price GTE $5
Sigma1 - Sigma2 GTE 8
Average Option Volume GTE 1,000
Days After Earnings GTE 5 LTE 70
Sigma1, Sigma2 GTE 1

Let's start with the Skew Tab, below.

Provided by Livevol

I note two things:

1. First, obviously ever strike in Jan is priced above Feb in terms of volatility.
2. Second, that vol difference expands between the two months as we move to the out-of-the-money (OTM) puts. We'll come back to that in a second.

To read more about skew, what is and why it exists you can click the title below:
Understanding Option Skew -- What it is and Why it Exists.

Now we can turn to the Charts Tab (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 let's note that this was a ~$13 stock not too long ago and it's now trading above $72.50 with an annual high of $101.  Whoa... That has taken the market capitalization above $2 billion.

Let's also note the tendency of this stock to move rather abruptly on earnings releases (the blue "E" icons represent earnings dates).  Just look at the last three...

Finally, I note that the stock has reached, for now, a sort of equilibrium -- $70 is about fair value per the equity market right now for the last couple of months.

Now let's turn to the one-year IV30™ chart in isolation, below.

Provided by Livevol

I include this chart simply to demonstrate that the implied is a bit elevated relative to the last year, but still in a range that looks kinda "normal" for this firm.

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

Provided by Livevol

Across the top we can see that Jan vol is priced to 81.75% while Feb vol is priced to 69.87%.  But, here's where that skew shape comes into play.

While Jan to Feb shows ~12 vol point difference in the at-the-money (ATM) options, check out, as one example, the Jan/Feb 60 put spread.  That shows a vol difference of 94.67% to 76.13% or ~ 18 vol points.  The option market reflects greater downside risk in the near-term for AEGR relative to the medium-term.  That creates a nice calendar vol spread to analyze.

This is trade analysis, not a recommendation.

Follow @OphirGottlieb

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Legal Stuff:
Options involve risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade options, and must meet suitability requirements.

The information contained on this site is provided for general informational purposes, as a convenience to the readers. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. I am not engaged in rendering any legal or professional services by placing these general informational materials on this website.

I specifically disclaim any liability, whether based in contract, tort, strict liability or otherwise, for any direct, indirect, incidental, consequential, or special damages arising out of or in any way connected with access to or use of the site, even if I have been advised of the possibility of such damages, including liability in connection with mistakes or omissions in, or delays in transmission of, information to or from the user, interruptions in telecommunications connections to the site or viruses.

I make no representations or warranties about the accuracy or completeness of the information contained on this website. Any links provided to other server sites are offered as a matter of convenience and in no way are meant to imply that I endorse, sponsor, promote or am affiliated with the owners of or participants in those sites, or endorse any information contained on those sites, unless expressly stated.

01-02-14: End of Day - New Highs/Lows, Implied Volatility Movers, Option Volume Movers, Elevated & Depressed IV/HV

New 52 Wk Highs in S&P 500



New 52 Wk Lows in S&P 500



Unusual Option Volume




Unusual Volatility Moves




Elevated Implied Volatility (IV) to Historical Volatility (HV)



Depressed Implied Volatility (IV) to Historical Volatility (HV)




This is trade analysis, not a recommendation.

Follow @OphirGottlieb

Tweet


Legal Stuff:
Options involve risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade options, and must meet suitability requirements.

The information contained on this site is provided for general informational purposes, as a convenience to the readers. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. I am not engaged in rendering any legal or professional services by placing these general informational materials on this website.

I specifically disclaim any liability, whether based in contract, tort, strict liability or otherwise, for any direct, indirect, incidental, consequential, or special damages arising out of or in any way connected with access to or use of the site, even if I have been advised of the possibility of such damages, including liability in connection with mistakes or omissions in, or delays in transmission of, information to or from the user, interruptions in telecommunications connections to the site or viruses.

I make no representations or warranties about the accuracy or completeness of the information contained on this website. Any links provided to other server sites are offered as a matter of convenience and in no way are meant to imply that I endorse, sponsor, promote or am affiliated with the owners of or participants in those sites, or endorse any information contained on those sites, unless expressly stated.

InterOil (IOC) - Volatility Dips After Stock Cataclysm; Skew Divergence Is Curious

IOC is trading $50.40, down 2.1% with IV30™ down 1.9%. The LIVEVOL® Pro Summary is included below.


Provided by Livevol

InterOil Corporation (InterOil) is an integrated energy company operating in Papua New Guinea and the surrounding Southwest Pacific region. InterOil operates in four segments: upstream, midstream, downstream and corporate. The upstream segment explores, appraises and develops crude oil and natural gas structures in Papua New Guinea.

I'm still looking at some the these volatilities in specific names and finding them remarkably low. I found IOC stock using a real-time custom scan that hunts for low vols.  There's also a skew story developing here which is of interest.

Custom Scan Details
Stock Price GTE $7
IV30™ - HV20™ LTE -8 GTE -40
HV180™ - IV30™ GTE 7
Average Option Volume GTE 1,200
Industry != Bio-tech
Days After Earnings GTE 32

The goal with this scan is to identify short-term implied vol (IV30™) that is depressed 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 purchasing depressed IV30™ relative to HV20™ simply because of a large earnings move.

The IOC 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 very bumpy ride in the price, most recently a huge gap down from $88.63 (12-5-2013) to $55.50 the next day or a 37.4% one day drop.  Here's the news surrounding that move:

---
InterOil plunged 37% after the oil and gas exploration and production company finally ended years of struggle by accepting a deal with France's Total (NYSE: TOT ) to help it develop its Papua New Guinea properties. The deal involves Total buying a majority stake in the oil and gas fields for $613 million up front, and Total will proceed with helping to build and operate a liquefied natural gas project in order to export natural gas from the island nation to energy-hungry countries across the Asia-Pacific region. InterOil could earn $212 million in milestone payments and also variable amounts if natural gas production exceeds certain thresholds, but investors clearly wanted more despite the lack of leverage InterOil has after failing to close a deal with ExxonMobil despite extended negotiation.

Source: The Motley Fool via Yahoo! Finance Why InterOil, Ulta Salon, and Barnes & Noble Plunged Today, written by Dan Caplinger.
---

Now let's turn to the two-year IV30™ chart in isolation, below.

Provided by Livevol

We can see the vol drop off of that stock moving news, which is actually normal.  Once news is out, the risk in the shares does deflate. On 12-6-2013 IV30™ dropped from 87.16% to 68.80%.  OK, fine...

The next day the implied dipped further into the 63% range, then climbed back to 69.25% as the stock began to find an equilibrium (or so it seemed).  In my mind that means ~69% vol is fair for this firm (earnings are in the Mar expiry, so that event is not relevant to this discussion).

Now look at that IV30™ chart and see how it has been dipping hard even after that "equilibrium."  As of today the IV30™ sits at 44.88%, fully 35% less than the "equilibrium" level.  Hmm...

There's even more going on with the vol.  Check out the Skew Tab, below.

Provided by Livevol

Look how different the shapes are for Jan options and Feb options.  Jan shows a parabolic skew, reflecting both upside and downside risk greater than the at-the-money (ATM) price.  That skew shape is in fact "irregular."

To read more about skew, what is and why it exists you can click the title below:
Understanding Option Skew -- What it is and Why it Exists.

If we than look to Feb skew, we see that "normal" shape, where the out-of-the-money (OTM) puts are priced to higher vol than the ATM options and the OTM calls.  So the question is... what's going on in Jan?  Why is the overall vol so low yet the wings (the OTM options) priced so high?

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

Provided by Livevol

Across the top we can see Jan vol is priced to 46.07% while Feb is priced to 45.59%.  But look at the vol of the OTM options in Jan.  While the $50 strike in Jan is priced to ~46%, the $60 strike is priced to 53.60% and the $40 strike is priced to 70.81%.

Let's watch IOC... This one may have legs.

This is trade analysis, not a recommendation.

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