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Aqumin provides interactive real time data visualization for financial services. The cutting edge user interface increases user's analytic capabilities and brings actionable opportunites to the forefront. Users across trading, risk, and compliance use Aqumin tools to spot trends, relational... More
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  • Volatility This Week - Modern Pyramids - HLF, NUS 0 comments
    Jan 4, 2013 4:10 PM | about stocks: HLF, NUS

    by Andrew Giovinazzi

    Modern Pyramids

    I keep looking for the new countdown clock for the March budget negotiation deadline. One could hope now that more people are paying their fair share we can cut some spending. Like I said one could hope. At least for a couple of months the binomial market event is going to move to the background. We can have a surprise, and that is what the market is back to pricing as opposed to a known market mover like the beginning of the week. Looking for things to do requires looking, so the OptionVision™ Market Landscapes are pretty good for that.

    I generally care about price and movement for trade generation with options. Unless the trade is a vanilla investment, idea generation has to start somewhere. The reason I like a realized volatility landscape with price movement is that they are the two biggest factors that move options day to day so you might as well go to the source. The HV10>HV20 just tells me stocks moving more now than last week. The short term realized vol (HV10) is hopping a bit more than the mid term (HV20) realized vol. In a sustained move in the underlying and there are some options waiting for a trade.

    (click to enlarge)

    I have selected two stocks that have standout upward movement of a volatile nature. Both HLF and NUS share similar business models of multilayers marketing. Some short selling funds call them something else. As far as the companies go they generate cash and have relatively little debt and have been ongoing concerns for some time. Who ultimately is right I don't know, but the stock volatilities are through the roof, especially when compared to the rest of the market. This makes for some interesting trades in the options. The higher volatilities will generate trades with lower risk like a butterfly or condor for relatively small dollars. I think that is the best way to trade the direction after the short covering rally.

    Themes: Options, Option Volatility Stocks: HLF, NUS
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