Friday, May 31, 2013

Post Market Report: 5-31-13

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Uni-Pixel (UNXL) - Exploding Vol; Collapsing Stock in a Magic Trick - That No One Gets to See


UNXL is trading $15.62, down 21% with IV30™ up 42.3%. The LIVEVOL® Pro Summary is below.




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Uni-Pixel, Inc. (Uni-Pixel) is a production-stage company delivering its Performance Engineered Film (PEF) to the display, touch screen and flexible electronics markets. The Company has developed thin film high volume roll to roll or continuous flow manufacturing process. It focuses to sell its films as sub-components for use in liquid crystal display (LCD) as a back light film and active film sub-component.

UPDATE: Getting many sources telling me that the firm is now showing demonstrations of the technology at several conferences. Check @Livevol_Pro Twitter or StockTwits feed for details.

So this one, is a really interesting story, aside from the stock and vol stuff 'n stuff. It's like a super secret magic trick that no one is allowed to see other than a select group of people who don't seem to agree on what they are seeing.  Here's the scoop on UNXL in general and then in particular to day's stock collapse and vol explosion which has put the implied at all-time highs.

UNXL has a new product called UNI-Boss, which is a touch screen technology. Ok... You can see a little video demo of the product on their website... OK... But, check this out:

---
One of the most interesting things about UniBoss is that very few people have seen the product outside of the limited presentation environment the company controls. Most investors have just seen the demos on the company's website and a few have visited the company. Almost nobody has actually gotten to play with the demo system and the company has, for about a year, refused to give investors samples.

Source: Seeking Alpha via Yahoo! Finance: Uni-Pixel: A Picture Is Worth A Thousand Words, written by Seth Shaw.
---

I repise this quote: "the company has, for about a year, refused to give investors samples."

The author of that article goes on to say that they are one of the few to have actually seen and touched this new product and they have really interesting snapshots to demonstrate the usage. UNXL has sub $1MM in revenue but has a market cap of $200MM which at one point very recently was more than $400MM. This is a spec stock on a spec product which could be huge... or not...

Let's turn to the two-year Charts Tab below. The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).



On the stock side we can see an entity that was trading below $5, to trading over $41 on 4-17-2013.  Since then, the stock has imploded down ~55% in a month and a half.

The headlines driving the recent drops are many, here's a taste:

---
May 22, 2013

Cowen & Co.’s Rob Stone this morning reiterates an Outperform rating on shares of touch sensor technology maker Uni-Pixel (UNXL), writing that the 26% plunge in the shares Friday was “significantly overdone,” prompted, he thinks, by a product delay that doesn’t change the company’s fundamental advantages.

Responding to rumors on Friday that a delay in Microsoft‘s (MSFT) next update to Windows 8, Windows 8.1, might postpone shipment of Uni-Pixel’s technology, Stone contends that there’s no change that he can see to the company’s business:

It is logical for the PC OEM partner to delay a new product launch within months of an operating system update. Nevertheless, investors may wonder if there could also be an underlying issue with UniBoss production readiness. However, UNXL stated that first production samples have already shipped, and a payment from the ecosystem partner indicates continued progress.

The “PC OEM partner” is not specified, but as I wrote on Friday, analysts have speculated it is Dell (DELL).

Source: Barron's via Yahoo! Finance: Uni-Pixel: Sell-Off on Rumors Overdone, Says Cowen, Position Intact, written by Tiernan Ray.
---

The news today, oddly, is... I have no idea...

The stock has been falling apparently b/c of the above news / worries. And how much is the worry?... Look at the bottom portion of the Charts Tab. The red line is the IV30™, and we can see how the implied has exploded ever since options started trading in this name. The first day of options trading (12-13-2012) the implied closed at 107%. Today, we're looking at nearly 180%. In English, the option market reflects nearly a double in the future risk of the firm as the stock price has risen and then collapsed. All on a spec product that basically no one gets to see... It's a magic trick! But it might be a real one...

Let's quickly turn to the Skew Tab, below.



We can see how elevated Jun is to Jul.  To me this vol divergence is simply a reflection of the fact that no one has any idea what's going on.  We don't get to see the product... There may even be an earnings event in Jul, though it's not a sure thing.  There may be more news about the product and its distribution, but there may not be.  The stock price drop could be a symptom of short-sellers, but it might not be.  The stock could pop back to the $40 range or fall back sub $10, or it might stay here.  All this in a very short-time period.

Finally, let's turn to the Options Tab, below.



Across the top we can see the monthly vols are priced to 179.77% for Jun and 153.85% for Jul. The Jun07 weeklies are priced just below 200% vol.  So, the option market reflects extreme risk in the equity price in the short-term, and a bit less moving out to the intermediate- and long-term.  We'll see...

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Pre-Market/Post Market: 5-31-13

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Thursday, May 30, 2013

Post Market Report: 5-30-13

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Pre-Market/Post Market: 5-30-13

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Wednesday, May 29, 2013

Post Market Report: 5-29-13

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Smithfield (SFD) - Pre-takeover Trades Seem Lucky; In the bad Way... How to Make $1MM in a Week


SFD is trading $32.55, up 25.3% with IV30™ down 64.8%. The LIVEVOL® Pro Summary is below.




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---
UPDATE (2:36 PM EST): With the stock now trading $1 higher, the profit in eight days is just over $1,000,000 or 1,150% in eight days.
---

Smithfield Foods, Inc. produces and markets a variety of fresh meat and packaged meats products both domestically and internationally. It operates in four segments: Pork, Hog Production, International and Corporate, each of which consists of a number of subsidiaries, joint ventures and other investments.

This is a very quick note on what appears to be highly suspicious trading in a takeover name.. yet again, the takeover includes a Chinese public company. First, the news moving SFD today:

---
Chinese meat producer Shuanghui International Holdings is looking to purchase Smithfield Foods (NYSE:SFD) for $4.7 billion in a move to feed China’s growing demand for pork.

Should the deal get past what’s likely to be heavy regulatory scrutiny, it could become the largest Chinese takeover of a U.S. company. The deal would be a landmark move in China’s efforts to expand its booming economy outside the country’s borders. Shuanghui has offered to pay $34 a share for Smithfield, an offer that’s 31 percent more than Tuesday’s closing share price.

Source: WALL ST. CheatSheet via Yahoo! Finance: Smithfield’s Big Leap: This Little Piggy Goes to China
---

So, OK, a takeover. SFD has averaged ~1,400 call options traded a day over the last three-months. But, on May 21st (eight days ago), the Jul 29 and Jul 30 calls traded ~1,200x and 1,500x respectively -- both were opening purchases. I have included the Time & Sales Tab from Livevol Pro for that day and those calls, below.





We can see the Jul 29 calls were purchased for ~$0.40 and the Jul 30 calls were purchased for ~$0.25.

Let's turn to the options tab as of right now.



The Jul 29 calls are worth ~$3.60 and the Jul 30 calls are now worth ~$2.60.  That would be a total of an $85,000 investment that now shows a paper gain of ~ $750,000 or an 860% gain in eight calendar days.

How fortunate...

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Tesla (TSLA) - This is a New Company; The Paradigm Shift Continues; Part 3 of 3.


TSLA closed Tuesday at $110.33, up 13.7% with IV30™ up 20.6%. The LIVEVOL® Pro Summary is below.




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Tesla Motors, Inc. is an electric vehicles and components manufacturer.

This is a follow up to two recent posts, one written on May 9th (three weeks ago) and the other on May 15th (two weeks ago):

5-9-2013
Tesla (TSLA) - Earnings Explosion Spectacle Hides Vol Shift -- This is a New Company -- A Paradigm Shift is Complete

5-15-2013
Tesla (TSLA) - May Skew Stays Parabolic; Vol Diff Opens... And Some Stuff You May Not Have Known...

I have included the symbol summaries at the time of the original posts:

5-9-2013


5-15-2013


Unbelievably, from that post three weeks ago, the stock is up another 50%; just incredible. Here are a few snippets from that post where I claimed that TSLA had turned into a "different" company in the eyes of the market; that the risk paradigm had changed and we could see it just after earnings were released.

---

We can see that while May vol is down 18.3 vol points, Jun vol is up 1.2 vol points... yeah, earnings are out, yet the second month shows higher vol... as does Sep, Dec, Jan '14 and Jan '15. Yeah, across the board outside of the front month, the option market reflects greater risk in TSLA stock from the short-term to the multi-year long term.

This is called a paradigm shift (well, that's what I call it) -- this company is now seen as a riskier entity. That's not bad news, in fact, for TSLA it's based on extraordinarily good news (earnings results). But TSLA is now a different company... and in this case, good for them... next level please...

---

Interesting that I used the phrase "next level" as the stock is now up 50% in three weeks after more than doubling in the first five months of the year. This was a $35 stock to start the year and is now trading well above $100.

Let's take a look at the two-year chart for TSLA as of the close on Tuesday (5-28-2013). The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).



We can see the meteoric rise, and the even more abrupt move of late in one direction : "stock up". TSLA is now a almost a $13 billion market cap firm. Here's another snippet, this one from the post two weeks ago:

---
One quick update before we get going... After I wrote the post on May 9th, I actually walked into a TSLA dealership and spoke to a salesman. He was a shareholder (or so he said). I have no idea if what he said was true, or if it is already common knowledge, but according to him the firm sold 2,600 cars last year, and this year they are going to break 20,000. The cheapest model is $70,000 and the most expensive is $113,00. They are at full capacity -- which according to him was 500 cars per week -- and every car made is to order so production = sales.

Further, at this point TSLA has one version -- one car -- in nine colors (or whatever). They are introducing a new model and... a right hand sided version of the current model (yeah, that would mean Europe). He also said the cars have ~470 HP -- or essentially, they are electric Lamborghinis with 300 miles to the battery charge which costs ~$9 when on absolute empty to recharge (in 8 hours).
---

Now the price move feels quite "bubbly" -- not that TSLA isn't absolutely killing it on the operational front (and earnings front), but my goodness the rise of late doesn't feel driven by fundamentals (it's neither steady but upward sloping, nor is it one big pop) but rater momentum (several consecutive weeks of upward movement). I just wonder, will this company become the next GM (the good GM, not the bad GM)?

I have included the one-year IV30™ chart in isolation, below.



We can see the pattern I made reference to in the earlier posts -- namely, even after earnings, the implied has started to climb again. In my opinion that means the firm has moved into a new risk paradigm -- i.e. a higher risk firm. Could it just be short-term? Yeah, could be. Could it just be put buyers (to hedge) and call buyers (to spec) as the stock leaps? Yeah, could be. Do I think that's the only part of the story? No, I don't. And why not?... Again, it's the longer-term implied vols that have my attention.

Let's turn to the Options Tab,for completeness.



Across the top we can see tat Jun vol is in the 90% range and rose nearly 17 vol points today (5-28-2013), alone. But look at Jul and Sep (and even Dec and Jan '14). All above or near 80%. Keep in mind, as of 5-5-2013 (so 23 calendar days ago), all of those monthly vol levels (including Jan '14) would have been above the annual high in IV30™. Again, the firm is ow different -- changed... like I wrote about AAPL.


4-23-2013
AAPL - Earnings Preview – Some Things You May Know, and Some You Do Not"

4-18-2013
Apple (AAPL) - This Just Isn't the Company it Used to Be... And it Never Will Be Again."

1-23-2013
Apple (AAPL) - "Just the Facts Ma'am" -- Well, that Supports the Opinion: "Everything has Changed. The Old AAPL is No More."

12-10-2012
AAPL - Everything has Changed. The Old AAPL is No More. The New AAPL is a Riskier Entity and the Market Doesn't Know What that Means Yet

12-5-2012
Apple (AAPL) - Have We Moved into a Totally New Volatility Paradigm for This Company? Has Everything Changed?

But this time, the stock is rising... a lot...

Hello TSLA, where are you going now?...

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Pre-Market/Post Market: 5-29-13

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Tuesday, May 28, 2013

Post Market Report: 5-28-13

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Cobalt Int'l (CIE) - Vol Breaches Multi-Year Lows; Vol Rises Monotonically in Future


CIE is trading $26.69, up 0.8% with IV30™ up 5.9%. The LIVEVOL® Pro Summary is below.



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Cobalt International Energy, Inc. is an independent, oil-focused exploration and production company with a salt prospect inventory in the deepwater of the United States Gulf of Mexico and offshore Angola and Gabon in West Africa.

I found this stock using a real-time custom scan. This one hunts for depressed vols. What I note specifically about this name is that the vol is now breaching multi-year lows.

Custom Scan Details
Stock Price GTE $5
IV30™ GTE 20
IV30™ Percentile LTE 10
Average Option Volume GTE 1,200

The two-tear CIE Charts Tab is included (below). The top portion is the stock price the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).



On the stock side we can see the incredible run up in the price from Dec 2011 to Feb 2012. In that three-month(ish) period the stock rose from a low of ~$8.80 to a high of $31.70 or a 260% rise. Since then, however, the stock has found a sort of quiet0period . In fact, one-year ago the stock closed at $23.23.

But, this is a vol note, so let’s take a closer look at the IV30™ in a two-year isolated cart.



Check out that drop in the implied. It has fallen from highs of over 115% to now multi-year lows in the 33% range. It’s that vol level that caught my eye especially considering the industry.

Finally, let's look to the Options Tab (below).



Across the top we can see the monthly vols are priced to 30.88% for Jun, 38.37 for Jul and 46.97 for Oct, so an interesting monotonic increase vol as we go further out. A big part of that vol increase is due to earnings releases, but still, the option market seems to be picking up on his depressed short-term vol. Very interesting vol evolution and price discovery…

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Pre-Market/Post Market: 5-28-13

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Friday, May 24, 2013

Post Market Report: 5-24-13

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MBIA (MBI) - Vol Implodes to Multi-year Lows; Is This a New Company Now that BAC Settlement is Over?


MBI closed on Thursday at $14.80, up 1.2% with IV30™ down 4.8%. The LIVEVOL® Pro Summary is below.




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MBIA Inc. (MBIA) together with its consolidated subsidiaries, operates the financial guarantee insurance businesses in the industry and is a provider of asset management advisory services. These activities are managed through three business segments: United States public finance insurance, structured finance and international insurance, and advisory services.

I found this stock using a real-time custom scan. This one hunts for depressed vols. But what we see here on the vol side is truly breathtaking.

Custom Scan Details
Stock Price GTE $5
IV30™ GTE 20
IV30™ Percentile LTE 10
Average Option Volume GTE 1,200

The two-year MBI Charts Tab is included (below). The top portion is the stock price the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).



On the stock side we can see that the price has risen from just under $9 to now just under $15 in two-years. More myopically we can see that massive gap up recently on 5-6-2013 from $9.83 to $14.29 or a 45% rise in one day. Here's the news that drove that stock reaction:

---
Shares of bond insurer MBIA soared Monday on news that it has reached a settlement with Bank of America in a long-running dispute over who would be on the hook for faulty mortgage securities issued during the U.S. housing boom.

MBIA will receive $1.6 billion in cash from Bank of America and a $500 million line of credit as part of the settlement, which awaits approval from New York state regulators, the companies announced Monday.

Source: CNN Money via yahoo! Finance: MBIA soars 45% on reports of BofA settlement, written by Chris Isidore.
---

So that was hugefor MBI, no doubt. But, let's take a closer look at the vol. I have included the two-year IV30™ chart in isolation below.



We can see a multi-year high in the implied of over 130% and as of this writing (close on Thursday), the options reflect the lowest risk in two-years with IV30™ closing at just over 40%. Wow...I know earnings just came out, and I know they are now cash rich, solvency isn't an issue, blah, blah, blah, but that is some low vol for MBI.

Of course, there is totally reasonable argument that MBI, now that the BofA case is settled, is a totally different entity. Literally, totally different risk paradigm now-- where solvency issues are a thing of the past, and the firm can now be judged on it's business model rather than it's liquidity crunch. it's an interesting perspective either way:
(1) MBI vol is waaaaay too low
(2) We have no idea what MBI vol should be, and perhaps it's more like a 20%-30% vol firm now that this news is done and dealt with.

Finally, let's look to the Options Tab (below).



Across the top we can see the monthly vols are priced to 40.04% for Jun and 39.99% for Jul. So, this is kind of the new normal for MBI, I guess... I guess... I guess?

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Pre-Market/Post Market: 5-24-13

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