Tuesday, March 20, 2012

Adobe Systems (ADBE) - Vol Crush After Earnings Pushes Implied to Two Year Low

ADBE is trading $33.05, down 4.2% with IV30™ down 43.9%. The LIVEVOL® Pro Summary is below.


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Adobe Systems Incorporated (Adobe) is a diversified software company. The Company offers a line of software and services used by professionals, marketers, knowledge workers, application developers, enterprises and consumers for creating, managing, delivering, measuring and engaging with content and experiences across multiple operating systems, devices and media.

This is a quick vol note -- ADBE just released earnings (yesterday AMC). The vol crush is notable. Let's start with a quick snippet of the news:

Adobe Systems tumbled after the software company said revenue growth slowed as sales of its Creative Suite software declined. Meanwhile, Jefferies raised its price target on the firm to $38 from $34.

Source: CNBC via Yahoo! Finance: Stocks Off Lows, but China Worries Remain

So there you go -- revenue miss 'n stuff 'n stuff. The story here is the vol, though. Let's turn to the Charts Tab (one year), below. The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).

The stock has done the "V" dance, now back up near levels it saw about a year ago. On the vol side, we can see the tremendous vol drop off of earnings. A vol crush is normal as a planned news event (a vol event) has been announced. What's a bit odd is the level. I've included just the IV30™, below (one year).

I've added a horizontal green line at today's level. Note that the level today is a new annual low. In fact, the implied is now trading at the lows reached in Apr of 2010. Turning back to the stock, the 52 wk range in ADBE is [$22.67, $35.99]. In English, a poor earnings report has pushed stock down a bit -- and stock is (was) near an annual high as vol has reached a two year (ish) low. Hmmm...

This is trade analysis, not a recommendation.

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