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Implied Volatility Surging for Entercom Communications (ETM) Stock Options
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Investors in shares of Entercom Communications Corp. need to pay close attention to the stock based on moves in the options market lately. That is because the Put which expires on Mar 17, 2017 for the $20.00 strike price had some of the highest implied volatility of all equity options today.
What is Implied Volatility?
Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility could mean that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that could cause a big rally or a huge sell off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.
What do the Analysts Think?
Clearly, options traders are pricing in a big move for Entercom Communications shares, but what is the fundamental picture for the company? Currently, Entercom Communications is a Zacks Rank #3 (Hold) in the Broadcast Radio and Television industry that ranks in the top 37% of our Zacks Industry Rank. Over the last 60 days, no analysts have increased their earnings estimates for the current quarter, while 1 has dropped the estimate. The net effect has taken our Zacks Consensus Estimate for the current quarter from 11 cents per share to 5 cents per share in that period.
Given the way analysts feel about Entercom Communications right now, this huge implied volatility could mean there’s a trade developing. Often times, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.
Looking to Trade Options?
Each week, our very own Dave Bartosiak gives his top options trades. Check out his recent live analysis and options trade for the AMZN earnings report completely free. See it here: Bartosiak: Trading Amazon's AMZN Earnings with Options or check out the embed video below for more details:
Image: Bigstock
Implied Volatility Surging for Entercom Communications (ETM) Stock Options
Investors in shares of Entercom Communications Corp. need to pay close attention to the stock based on moves in the options market lately. That is because the Put which expires on Mar 17, 2017 for the $20.00 strike price had some of the highest implied volatility of all equity options today.
What is Implied Volatility?
Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility could mean that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that could cause a big rally or a huge sell off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.
What do the Analysts Think?
Clearly, options traders are pricing in a big move for Entercom Communications shares, but what is the fundamental picture for the company? Currently, Entercom Communications is a Zacks Rank #3 (Hold) in the Broadcast Radio and Television industry that ranks in the top 37% of our Zacks Industry Rank. Over the last 60 days, no analysts have increased their earnings estimates for the current quarter, while 1 has dropped the estimate. The net effect has taken our Zacks Consensus Estimate for the current quarter from 11 cents per share to 5 cents per share in that period.
Given the way analysts feel about Entercom Communications right now, this huge implied volatility could mean there’s a trade developing. Often times, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.
Looking to Trade Options?
Each week, our very own Dave Bartosiak gives his top options trades. Check out his recent live analysis and options trade for the AMZN earnings report completely free. See it here: Bartosiak: Trading Amazon's AMZN Earnings with Options or check out the embed video below for more details: