Options heads-up
- CTYK options volatility elevated
- Stock in multi-month trading range
- More than earnings on the horizon
On Tuesday, Cytokinetics (CTYK) was high on the LiveAction scan identifying stocks with high 30-day implied volatility (IV) relative to their 30-day historical volatility (HV):
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)
Because HV measures how much the stock moved in the past (in this case, the most recent 30 days), while IV represents how much the options market “thinks” the stock will move in the future, large discrepancies between the two can alert traders to possible market-moving situations.
A quick glance at CYTK’s price chart wouldn’t necessarily lead traders to think anything much was happening with the stock. The biotech’s shares have been moving sideways since last November, and this week HV (blue line, bottom panel) has been close to its lowest levels of the past couple of years.
Despite the stock’s recent stagnation, though, IV was near its highest level since late 2023:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)
So why was the options market seemingly signaling a potential breakout? The first probable explanation is a looming earnings announcement, which routinely results in elevated IV. CYTK is scheduled to post its numbers in early May.
The second—and perhaps more significant—factor is that the company is scheduled to announce the results of a key clinical trial sometime this quarter. That’s also likely why CYTK also appears on the scans for elevated 60- and 90-day IV.
In other words, the options market is pricing in the possibility that this could be an eventful summer for the stock.
Market Mover Update: Solstice Advanced Materials (SOLS) was prominently featured on different LiveAction scans for unusual options volume on Tuesday. The specialty chemicals company had put options volume of nearly 17,000 contracts in early trading—more than 100 times its daily average, and more than 400 times its call volume. With the stock trading around $80, almost all the put volume was in the May $60 puts. The company is currently scheduled to release earnings in early May.
Despite continued volatility, on Tuesday aerospace aftermarket stocks GE Aerospace (GE) and Transdigm (TDG) were up more than 7% and 12%, respectively, since March 25 (see “Aftermarket move overdone?”).
Today’s numbers include (all times ET): mortgage applications (7 a.m.), Empire State Manufacturing Index (8:30 a.m.), Import and Export Prices (8:30 a.m.), Housing Market Index (10 a.m.), EIA Petroleum Status Report (10:30 a.m.), Beige Book (2 p.m.).
Today’s earnings include: First Horizon (FHN), J.B. Hunt Transport (JBHT), Morgan Stanley (MS), PNC Financial (PNC).
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