VVUS Implied Volatility Tops 700
Tue, Jul 13, 11:12 AM ET, by Bill Luby
From time to time I have highlighted extremely high implied volatility in individual securities such as FAS, IOC, EWZ and the banks that were subject to the stress tests (see links below.) With the recent action in Vivus (VVUS), however, it may be time to reconsider just how extreme implied volatility can get. Vivus has a new weight-loss pill, Qnexa, that is under review by the FDA, with a decision expected today. For those who are interested in the details, Business Week provides a handy summary of the situation in Vivus's Diet Pill Qnexa Faces FDA Scrutiny on Safety. In the chart below, the red line is the aggregate implied volatility of July options in VVUS, as calculated by Livevol Pro. The yellow line is August aggregate IV and the green line is September aggregate IV.
Once the FDA decision has been announced, I will be back to analyze the impact of the news on the various Vivus options and their implied volatility. With IV this high, VVUS is probably a better for spectators than investors right now. This is a lottery ticket - and an expensive one. Not a place for 'risk capital' in my book, but perhaps an appropriate risk of 'entertainment capital' if anyone one has some of that sitting around. For more on related subjects, readers are encouraged to check out:
[source: Livevol Pro]
Disclosure(s): long VVUS at time of writing; Livevol is an advertiser on VIX and More
SDI Glossary: "Exchange" Definition
SDI Glossary: "Option" Definition
SDI Glossary: "VIX" Definition
This Article's Word Cloud:
Business
Cheap
Components
DJIA
Diet
Financial
Highs
Implied
Interoil
Livevol
Once
Pill
Qnexa
VVUS
Vivus
Volatility
Week
With
aggregate
back
below
book
capital
decision
expensive
extremely
handy
high
however
impact
implied
interested
line
long
news
options
perhaps
pill
probably
recent
reconsider
risk
sitting
subjects
that
ticket
time
volatility
with
yellow
More articles: 1 2 3 4 5 6 7 next »
| 
RSS
