Another Day, Another Potential Disaster?
We were going over our
volatility scans looking for interesting buys or sells and we found something
interesting indeed. VoiceStream Wireless
(
VSTR |
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Chart |
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PowerRating) seems to have
attracted a large amount of interest from the bears, and I don’t mean Chicago
Bears. In particular, the FEB 90s and FEB 105 puts are off the charts in terms
of both volatility expansion and volume explosion. Two thousand FEB 90 puts and 10,000
FEB 105 puts have changed hands (as of 11:15 am CST), so we’re not talking
about some minor players taking small positions down, we’re talking
institutional players betting on a collapse.
How much have the vols and volumes exploded? Well, as of yesterday, the five-day
average volume for VSTR options was just 400 contracts. That’s substantially
less than its 30-day average of 2400 contracts. The volatility is also through
the roof, as yesterday we saw options trade for 55% and today, we’re seeing
more like 75%.
Since VSTR’s earnings are due in about 4 days, I’d say these institutional
players are betting on a shortfall. Now, VSTR isn’t a handset maker like Nokia
(
NOK |
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PowerRating),
or Ericsson
(
ERIC |
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News |
PowerRating), but the bad news from those two may be influencing this bearish bet.