I liked the special title there for our blog today.? For the most part the activity in the volatility markets was pretty muted yesterday.? On balance some decent earnings but nothing to light a candle under the big indexes.? The NDX was up about .33% so the CES show was not exactly lighting a candle under the technology stocks.? I was reading a column in the WSJ not so long ago that the next technology innovations won?t be enough to spur economic growth or some sort of nonsense like that.? Some professor was espousing this idea and it reminds me of a quote from the head of the US Patent Office around the end of the 19th century, ?Everything that can be invented has been invented,? he opined in ?.1898.?? Well he was a little bit off and while the CES is not lighting up the tape yet just wait and I am sure things will change.
Back to more mundane issues like total volatility implosion.? After earnings it is the normal course of things that volatility gets smacked in individual names.? AA is among the dowdiest stocks on the planet.? The stock price range for the last 52 weeks according to Livevol is $2.90.? That is not for the day but for the year.? If you see below in glowing 3D I have a relative volume view. ?The red means the volatility is down (42%) and the spikiness means that lower volatility was on heavy volume.? Option paper is saying AA is not going to move until past Feb expiration as they hit the 9 strike in good size all down the calls and puts.
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The yearly levels look dismal too as AA quite handily made a 52 week low in IV30.? It is almost like the stock can never move again.? It reminds me of the Patent Office guy since everyone is so sure.? I am not so sure.
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Livevol (r)?www.livevol.com
This is one of those times that it might pay to be counter trend.? If AAPL starts selling plastic bodied phones it might dent AA a bit but not that much.? The AA Jan 9 calls are trading for .16 or .08 over parity.? That is nothing.? I don?t need a big move just one that gets us to the highs of today around $9.33.? When options get this cheap there is not much downside left.
The Trade
Buy a few AA Jan 9 calls.? If the market lifts at all they should be worth more than they cost to buy.