Options premiums are rich in Vishay Intertechnology, prompting
one trader to sell volatility before earnings.
optionMONSTER's tracking systems detected a transaction in 3,355
November 10 puts, most of which priced for $0.30, against open
interest of just 377 contracts. Most of the trades went for the bid
price, indicating that they were sold.
Implied volatility in the chipmaker is running at about 44 percent
and has held that level despite a steady decline in realized
volatility over the last month. The put seller is probably betting
that implied volatility will drop after VSH issues results the
morning of Nov. 2, a common phenomenon. If that proves correct and
the stock holds its ground, the puts will lose value and the trader
will get to keep the premium.
VSH rose 0.38 percent to $10.59 in morning trading and is up 16
percent in the last month. The last earnings report on Aug. 3 was
better than expected, fueled by demand for netbooks and automotive
The put sale came after the stock spent about two weeks breaking
through resistance at $10.50, a level where the stock rolled over
in mid-May before proceeding to an eight-month low below $7 in
The transaction also stands to benefit from the accelerating pace
of time decay that occurs in the final month before expiration.
Total option volume in VSH is 22 times greater than average so far
(Chart courtesy of tradeMONSTER)
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