IRM has traded over 12,500 options on total daily average option volume of just 402. All but 22 contracts (not a typo) have been puts. The largest trade has been a sale sale of the Jul 20 puts 12,203x. The Stats Tab and Day's biggest trades snapshots are included (click either image to enlarge).
CTAS has traded over 13,000 options on total daily average option volume of just 910. All but 28 contracts (not a typo) have been puts. The largest trade has been a sale sale of the Jul 22.5 puts 12,016x. The Stats Tab and Day's biggest trades snapshots are included (click either image to enlarge).
The similarities continue... The Options Tab for each (click to enlarge) illustrate:
1) The puts are opening for both (compare OI to trade size).
2) Neither stock has an OI anywhere near the number of puts traded today on any line.
3) July vol > the next month while both have earnings in that next month (earnings = vol event). The earnings dates for both are estimates, verify on your own!
The Skew Tab snaps (click to enlarge) for each continue the similarities.
The trades are on lines (strikes) where July (yellow) > the next month (green). You can also see for both that the skew is fairly "normal" shaped - that is, the downside is bid (higher vol) and the upside fades lower (lower vol). These trades are selling elevated downside vol.
Finally, the Charts Tab (6 months) is included for each (click to enlarge).
The dips in mid Feb for each look the same - but both never dipped below (or to) the strike that was sold today. Both stocks now hover a few dollars above the strikes sold.
Conclusion
I've been writing for a while that pros tend to sell summer to collect premium over what is usually a dead period. Later they may (usually do) take that premium won and buy the Fall for a swoon.
The trades today, though they seem to be in totally different stocks b/c of the totally different industries, are in fact very similar.
The idea: If you're gonna sell summer vol, do it when it's elevated. The Jul vol for both is above earnings vol months, right after the market fell apart on Friday and has moved down/sideways today thus far.
This trade could lose huge obviously, but if you're a summer seller, then the guys today feel like now is the right time. Though it's not the sexy trade, some professional option traders make the vast majority of their wealth in the doldrums of summer.
Just for the record, I'm not convinced, but then again, I'm a big bear so take that with a grain (or a pound) of salt...
This is trade analysis, not a recommendation.
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