By Chris McKhann
Volatility remains high for American Axle and Manufacturing (AXL), and at least one trader is trying to take advantage of inflated option premiums.
The average implied volatility for AXL, which manufactures auto drivetrain systems, is 61%. That has fallen off from a 52-week high of over 100% that was set in May, but it is still quite high and above the 30-day historical volatility of 57%. The stock has settled down some, as shares are down 0.44% this morning to $8.70 and right in the middle of their recent range.
American Axle is not a typical options target, with 1,000 options trading on an average day, but the January 6 puts have seen 3 times that volume already today. All of it appears to be selling, moving in the course of 2 minutes for $0.35. The volume was 20 times the previous open interest, so these were new opening positions.
Those puts have an implied volatility of 77%, as it is typical for out-of-the-money puts to have implied volatility that is higher than the average. Shares of AXL were only briefly below $6 at its 52-week lows in October 2009.
(Chart courtesy of tradeMONSTER)