MTG, PMI - Mortgage Insurers' Order Flow into Earnings

MTG is trading 11.00 with IV30™ up 2.7%. PMI is trading 4.98 with IV30™ up 7.5%. The LIVEVOL™ Pro Summaries are below.





Both stocks shot up nicely at the open - the tick charts are included (MTG and PMI respectively).





Recent News: "Mortgage insurers surge on Obama modification plan"
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MTG has traded over 10,000 options in the first hour and a half on total daily average option volume of just 3,307. All but 910 contracts have been calls. The largest trades have been the Sep 10/12.5 call spread (purchased). The Stats Tab and Day's biggest trades snapshots are included (click either image to enlarge).






PMI has traded over 4,000 options in the first hour and a half on total daily average option volume of just 904. All but 195 contracts have been calls. The Stats Tab and Day's biggest trades snapshots are included (click either image to enlarge).

The MTG Options Tab (click to enlarge) demonstrates that the Apr call volume is smaller than the OI. A little order flow analysis shows the Apr 7.5 calls are purchases today on top of long OI - the trades today are also opening. The Apr 10 calls are sales today on long OI - these are closing sales. Note also the large OI in some of the other calls.



The MTG Skew tab illustrates the bend upward in the May OTM calls - keep in mind, earnings are in May.



The PMI Options Tab (click to enlarge) demonstrates that the Jun and Sep 5 call volume is smaller than the OI. The same analysis shows these purchases are on top of long OI - the trades today are also opening. Note also the large OI in some of the calls.



Just like MTG - the PMI Skew tab illustrates the bend upward in the May OTM calls - keep in mind, earnings are in May for PMI as well.



Finally, the Charts Tab (6 months) for MTG and PMI respectively are included (click to enlarge). The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue). The yellow shaded area at the very bottom is the IV60™ vs. the HV30™ vol difference.





Note the recent run up in both.

So there are call buyers on high volume, growing OI in some long calls, a bend in the upside earnings skew and a stock run up with earnings to come. A contrarian: "SOLD!" A momentum trader: "BUY 'EM!" Which are you?...

This is trade analysis, not a recommendation.

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United Rentals (URI) - Vol Buyer into Earnings

URI is trading 9.38. Earnings are estimated for the end of April (May option cycle). The LIVEVOL™ Pro Summary is below.



The company has traded over 5,500 options in the first 2 hours on total daily average option volume of just 679. The May 10 calls (purchases) are the bulk of trading. All the trades are calls (zero puts have traded). The Stats Tab and Day's biggest trades snapshots are included (click either image to enlarge).





The stock has traded actively today - already 1.6 million + shares on a total daily average of 1.5 million. The stock stats are included (click to enlarge).



This could mean the calls are trading with stock and getting turned into straddles (or puts). Either way, this position is long vol going into earnings.

The Options Tab (click to enlarge) illustrates that the calls are mostly opening (compare OI to trade size). You can also see that May vol is up 2.1 points while all other months are down.



The Skew tab shows the divergence between the 10 strike in May and the other months - namely the 10 strike vol is rising relative to other months as the buying continues on that line.



Finally, the Charts Tab (6 months) is below (click to enlarge). The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue). The yellow shaded area at the very bottom is the IV60™ vs. the HV60™ vol difference.



You can see the run up in stock recently as well as the IV30™.

This is trade analysis, not a recommendation.

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** UPDATE - Popular (BPOP): One Sided Order Flow Grows

** UPDATE

First post: Click Here

BPOP is trading 2.72. The LIVEVOL™ Pro Summary is below.



The first blog I wrote on this company was exactly a week ago (3-22-2010). I discussed the growing open interest in the calls (purchases). Today more of the same - with a quick review of the past week as well.

The company has traded over 9,500 options in the first 2 hours on total daily average option volume of just 1,085. Zero puts have traded - it's all calls, mostly the Jul 3.5 kind. Last week, it was 10,000 calls with no puts in the first hour. The Stats Tab and Day's biggest trades snapshots are included (click either image to enlarge).





The Stock Stats snap is included (click to enlarge). Note the volume is right where it should be to hit the average - I don't think these calls are trading with stock. In other words, I don't think these are calls turned into puts - they seem like naked call purchases.



The Options Tab (click to enlarge) illustrates that Jul 3.5 calls are mostly opening (compare OI to trade size) highlighted in yellow. In orange you can see the OI from the prior week (i.e. the catalyst to the first blog).



The Jul 3.5 calls have 3,801 open contracts already. The Level 2 pop up snap is included (click to enlarge).



You can see the OI jumped as of 3-29-2010 (today). That means the opening orders were Friday (3-26-2010). The Time & Sales snap from Friday for that line filtering for 100 lots or larger is included (click to enlarge).



Pretty simple order flow to analyze - everything traded on the offer - customer buying. The 9,000+ contracts today for the Jul 3.5 calls are in addition to the 3,800 opened on Friday.

Finally, the Charts Tab (6 months) is below (click to enlarge). The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue). The yellow shaded area at the very bottom is the IV60™ vs. the HV60™ vol difference.



Note again the jump in stock price - nearly 60% since mid Feb.

This is trade analysis, not a recommendation.

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Reliant Energy (RRI) - Straddle Buyer (possible ratio)

RRI is trading 3.77 up 5%. The LIVEVOL™ Pro Summary is below.



The company has traded over 12,500 options in the first 2 hours on total daily average option volume of just 2,741. The Nov 3 calls were bought 10,000 times on a single print. The Stats Tab and Day's biggest trades snapshots are included (click either image to enlarge).





Looking at the stock volume today relative to average (click to enlarge) you can see almost twice the stock volume in just 2 hours.



Looking at Time & Sales for the underlying (click to enlarge) there are three 740,000 prints for stock at (or around) the 10:32 Nov 3 Call purchase as well as a 200,000 print. They all look like sales. It looks to me like someone is turning those calls into straddles (possibly on a ratio).



The Options Tab (click to enlarge) illustrates that the calls are mostly opening (compare OI to trade size - though OI is large). The puts on that same line are almost all opening 1893 volume vs 25 OI. You can also see that the front three months have vol decreases while Nov has a vol increase. The final 2 months then show vol decreases again. The Nov buying is bidding up the vol.



The Skew Tab snap (click to enlarge) shows exactly the strike purchased relative to the rest of the month and all other months. It's now bid up pretty high.



Finally, the Charts Tab (6 months) is below (click to enlarge). The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue). The yellow shaded area at the very bottom is the IV60™ vs. the HV60™ vol difference.



You can see the recent drop in stock price and how the IV30™ and IV60™ haven't really risen in response.

If the trade is a straddle here are the calculations:
Buy Calls: 1.05
Buy Puts Synthetic: 1.05 - (3.67 - 3.00) = 0.38
Straddle = 1.05 + 0.38 = 1.43

So the straddle makes money above 4.43 and below 1.57. If the straddle is lopsided (ratio to upside), then it will lose money quicker on the downside but make money faster on the upside - i.e. lower breakeven on the upside).

One nice thing about cheap stocks is the limited downside risk - a stock can only go as low as $0.

This is trade analysis, not a recommendation.

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CIGX - 450% Run up - The story behind the story - behind the story

CIGX (formerly STSI) is trading 2.70 - up 440% since December. The IV30™ is up 8 points to 190. The LIVEVOL™ Pro Summary is below.



I lost money trading this stock when it was STSI and it lost a lawsuit against big tobacco - got emotionally tied to the story. It was the largest patent infringement suit ever and wreaked of impropriety from the judge all the way down.

It was, and still is, simply the most fascinating story I have ever read related to finance. Curious minds can go: HERE
NOTE: This takes a while to load, but man is it worth it! Can you say, Composite Operator?

Anyway, the above did nothing and the stock went almost to zero. The recent news - if you can call it that, is this:
Reference: Click Here.

1. CIGX’s CEO has recently bought 2.3 million shares at $1.14 per share for $2.7 million.
2.CIGX’s largest investor, Tradewinds Master Fund, has also raised its stake in the company. The fund bought 1.7 million shares at $1.14 per share after entering the stock in December at as low as $0.59 per share. Tradewinds Master Fund now has a state of over 16% and, as per SEC’s new rules, it cannot sell the shares for the next six months.
3.Robert Roskamp, who started the Roskamp Institute conducting research on Alzheimer's disease, bought 769,000 shares for $1 million. He has also bought the right (a warrant) to buy an additional 1,000,000 shares for $1.50 per share. The chief scientist at Roskamp Institute, Michael Mullan, was instrumental in ascertaining the relationship between the buildup of the beta-amyloid protein in the brain and Alzheimer's. Meanwhile, Star Scientific is also engaged in the development of pharmaceutical products for the treatment of a range of neurological conditions, including Alzheimer’s disease. There is a possibility that the institute is conducting its research on Star Scientific’s product or Robert Roskamp knows something.

Unrelated to above - the stock actually jumped all the way to $3 right after the open today then fell to its current level. The Tick Chart is included (click to enlarge).



I believe the company is now selling stock to fund operations as they essentially have zero revenue.

The company has traded nearly 11,000 options in the first hour on total daily average option volume of just 1,931. In reality, this thing has been trading tens of thousands of options in the last week every day. The Stats Tab and Day's biggest trades snapshots are included (click either image to enlarge).





The Options Tab (click to enlarge) illustrates open interest - note the calls - even the Apr 4. Apr 5 and May 3 calls have large OI.



Finally, the Charts Tab (6 months) is below (click to enlarge). The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue). The yellow shaded area at the very bottom is the IV30™ vs. the HV20™ vol difference.



Note the stock run up AND the option volume bars at the bottom. The green color indicates unusual opening order call buying by customers relative to opening order put buying - from ISE.

This is trade analysis, not a recommendation.

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MF Global (MF) - The Power of Goldman

MF is trading 8.03 up 9.7% with IV30™ up 35%. The LIVEVOL™ Pro Summary is below.



The stock and options have traded heavily today. The stock has traded over 23.6 mllion shares on daily average of just 1.5 million. The Stock Stats snap is included.



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Here's the news: (http://www.thestreet.com/_yahoo/story/10710413/1/mf-global-rises-will-pay-corzine-5-million.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA)
After the market closed on Tuesday, MF Global announced that it had hired former New Jersey Governor and Goldman Sachs(GS) head John Corzine as its chairman and chief executive, effective immediately.

After the announcement, MF Global's stock popped more than 11% to $7.32 in the after-hours session Tuesday
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Ah, the power of Goldman... You think this guy may have an inside track to the government and rule making with respect to CDOs, etc?...

The company has also traded nearly 10,000 options in the first three hours on total daily average option volume of just 251. Calls are trading in a 3:1 call : put ratio. The Stats Tab snapshot is included (click either image to enlarge).



The Options Tab (click to enlarge) illustrates that the Apr 10, May 10 and Jun 10 calls are most active. Apr and May are all opening (zero open interest). Jun is mostly opening. Apr and May seem like pre-dominantly purchases. Note the vol jump in the first three months.



Finally, the Charts Tab (1 year) is below (click to enlarge). The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue). The yellow shaded area at the very bottom is the IV60™ vs. the HV60™ vol difference.



Note MF has gapped up on the news and broken through a trading range to a 52 wk. high.

This is trade analysis, not a recommendation.

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BYD, GAME - Diverging Gamers Both In Play

BYD is trading 9.84 with IV30™ up 7.6%. GAME is trading 6.64 with IV30™ up small. The LIVEVOL™ Pro Summaries are below.





It looks like both of these names are trading on takeover rumors. Which one would you buy? Check out below...

Each company has traded several fold the total daily average option volume in the first 2 hours.

BYD: 15,600+ options trade of which ~15,000 are calls for a 22:1 call:put ratio. Total daily average volume is just 1,180. The Stats Tab and day's biggest trades snaps are included (click to enlarge).





GAME: 15,500+ options trade of which essentially all are calls for a 87:1 call:put ratio. Total daily average volume is just 493. The Stats Tab and day's biggest trades snaps are included (click to enlarge). The Sep 5 calls are essentially everything in GAME.





BYD: The Options Tab (click to enlarge) illustrates that the Apr 10, May 10 and May 12.5 calls are trading. The volume is larger than OI on each line - these are mostly opening. The OI om the Apr 10 calls were also purchases from my analysis - this is a double down on that line. Note also the vol increase for each of the months (top of snap).



GAME: The Options Tab (click to enlarge) illustrates that the Sep 5 calls are trading size and opening.



The Skew Tab for BYD (click to enlarge) illustrates the upward bend of the front month calls (red line to the right) from the call purchases. GAME doesn't have an interesting skew as it has too few strikes.



BYD: Finally, the Charts Tab (1 year) is included (click to enlarge). The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue). The yellow shaded area at the very bottom is the IV60™ vs. the HV60™ vol difference.



Notice the recent run up in price and vol. The stock price run seems catapulted by earnings (see the "E" icon on top chart).

GAME: A dffierent story here. The stock gapped down 3-1-2010 on downward revenue guidance.



It looks like both of these names are trading on takeover rumors. Which one would you buy?

This is trade analysis, not a recommendation.

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