kusadasi schreef op 12 juli 2017 17:11:
Options Traders Expect Huge Moves in ArcelorMittal (MT) Stock
Zacks
Zacks Equity Research
ZacksJuly 12, 2017
Investors in ArcelorMittal MT) need to pay close attention to the stock based on moves in the options market lately. That is because the Jul 14th 2017 $19.5 Put had some of the highest implied volatility of all equity options today.
What is Implied Volatility?
Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.
What do the Analysts Think?
Clearly, options traders are pricing in a big move for ArcelorMittal shares, but what is the fundamental picture for the company? Currently, ArcelorMittal is a Zacks Rank #2 (Buy) in the Steel - Producers industry that ranks in the Bottom 25% of our Zacks Industry Rank. Over the last 60 days, one analyst has increased the earnings estimate for the current quarter, while none has dropped the estimate. The Zacks Consensus Estimate for the current quarter has increased from 63 cents to 78 cents over the same time frame.
Given the way analysts feel about ArcelorMittal right now, this huge implied volatility could mean there’s a trade developing. Often times, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.