Another factor that I think is entering into the price action of VLNC recently is options trading, which I will not try to figure out the cause and effect, other than to say that I think it's having a short term negative effect given the imbalance in open lots between calls and puts.
It looks like there's about a 10:1 call:put open interest ratio. In other words, a lot of speculation was made in purchasing calls at 5, 7 and 10 for December, Jan and March vs buying puts. So, people dealing in options expected the price to go up big time since they purchased so many calls vs puts. Even as of today with the price down to $6.25, there's over 1,000 open Dec 7s and 5s. So, to hedge against this negative price movement and end up with worthless options, the dealers could be selling the stock itself at these levels to offset the requirement to buy it back at 5 or even 7. Whatever the method to recoup their potential losses, it seems like the dealers would have to make a trade that's opposite the momentum than buying the stock (or buying a call). Surprising, there's still relatively little open interest or activity in puts.
Anyone else have a take on this? I reviewed the option activity on Stocksmart. |
