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On Wednesday, Investors pushed call option prices higher in the savings & loan industry and pushed put option prices higher in the electric utilities industry.Any time the volatility skews above 1.00, it is an indication that calls are more expensive than puts. Typically, when calls are more expensive than puts, it means the demand for calls is greater than the demand for puts because investors believe the stock is going to rise in the future and they want to take advantage of that movement by buying calls.
The opposite is also true. Any time a volatility skews below 1.00, it is an indication that puts are more expensive than calls.
Bullish Volatility Skews
- Hudson City Bancorp, Inc. (HCBK)---part of the Savings & Loans industry---came in at the top with a volatility skew of 1.13. This may come as a surprise as HCBK is down -6.89 percent for the past month.
- CMS Energy Corp. (CMS) followed things up with a volatility skew of 1.11. CMS has also been trading lower during the past month with losses of -0.06 percent.
- Nisource Inc. (NI) has a volatility skew of 1.10. NI has climbed 0.62 percent this month.
Bearish Volatility Skews
- Xcel Energy Inc. (XEL)---part of the Electric Utilities industry--- came in at the bottom of the pile with a volatility skew of .83. It appears option traders are looking for a reversal as XEL has gained 0.28 percent the past month.
- Pinnacle West Capital Corp. (PNW) was next to last with a volatility skew of .89. PNW on the other hand, has moved lower during the last month---losing -2.65 percent.
- ConocoPhillips (COP) has a volatility skew of .90. COP has risen 3.61 percent this past month.
Disclosure: Hansen does not own shares of the stocks discussed above. Positions can change without notice.
- Nisource Inc. (NI) has a volatility skew of 1.10. NI has climbed 0.62 percent this month.
Bearish Volatility Skews
- Xcel Energy Inc. (XEL)---part of the Electric Utilities industry--- came in at the bottom of the pile with a volatility skew of .83. It appears option traders are looking for a reversal as XEL has gained 0.28 percent the past month.
- Pinnacle West Capital Corp. (PNW) was next to last with a volatility skew of .89. PNW on the other hand, has moved lower during the last month---losing -2.65 percent.
- ConocoPhillips (COP) has a volatility skew of .90. COP has risen 3.61 percent this past month.
Disclosure: Hansen does not own shares of the stocks discussed above. Positions can change without notice.
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