Thursday, May 27, 2010

E-House (EJ) - Call Buyer Pushes Summer Vol Past Nov

EZ (a real estate services company in China) is trading 14.42, 3.1% today with IV30™ up 3.9%. The LIVEVOL™ Pro Summary is below.

The company has traded over 7,000 options today on total daily average option volume of just 1,578. All but 202 contracts have been calls. The action has been in the Jul 17.5 calls (purchases). The Stats Tab and Day's biggest trades snapshots are included (click either image to enlarge).

The Options Tab (click to enlarge) illustrates that the calls are opening (compare OI to trade size). You can also see that Jul vol is up 5.4 points while Jun is up just 0.1 and Aug is up 2.0. This pushes the Jul vol to 74.05 which is greater than Aug (71.75) even though earnings are in the Aug cycle (a vol event).

The Skew Tab snap (click to enlarge) illustrates how the 17.5 line has jumped relative to the other lines. Also note how low Nov is relative to the summer.

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

The Jul 17.5 calls went for $0.45 so the trade (if naked) breaks even at $17.95. I've drawn a light blue horizontal line at the 17.5 strike (ish). We can see that EJ has been well above recently. The 52 wk. high is $24.39.

This is trade analysis, not a recommendation.

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