Investors in Cinemark (CNK - Free Report) need to pay close attention to the stock based on moves in the options market lately. That is because the Jan 21, 2022 $10.00 Put 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 suggest 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 may 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 Cinemark shares, but what is the fundamental picture for the company? Currently, Cinemark is a Zacks Rank #4 (Sell) in the Leisure and Recreation Services industry that ranks in the Top 34% of our Zacks Industry Rank. Over the last 60 days, four analysts have increased their earnings estimates for the current quarter, while one has dropped the estimates. The net effect has narrowed our Zacks Consensus Estimate for the current quarter from a loss of 24 cents per share to a loss of 16 cents in that period.
Given the way analysts feel about Cinemark right now, this huge implied volatility could mean there’s a trade developing. Oftentimes, 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.
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Investors in Cinemark (CNK - Free Report) need to pay close attention to the stock based on moves in the options market lately. That is because the Jan 21, 2022 $10.00 Put 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 suggest 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 may 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 Cinemark shares, but what is the fundamental picture for the company? Currently, Cinemark is a Zacks Rank #4 (Sell) in the Leisure and Recreation Services industry that ranks in the Top 34% of our Zacks Industry Rank. Over the last 60 days, four analysts have increased their earnings estimates for the current quarter, while one has dropped the estimates. The net effect has narrowed our Zacks Consensus Estimate for the current quarter from a loss of 24 cents per share to a loss of 16 cents in that period.
Given the way analysts feel about Cinemark right now, this huge implied volatility could mean there’s a trade developing. Oftentimes, 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.
Buy 5 Stocks BEFORE Election Day
Biden or Trump? Zacks is releasing a FREE Special Report, Profit from the 2024 Presidential Election (no matter who wins).
Since 1950, presidential election years have been strong for the market. This report names 5 timely stocks to ride the wave of electoral excitement.
They include a medical manufacturer that gained +11,000% in the last 15 years… a rental company absolutely crushing its sector… an energy powerhouse planning to grow its already large dividend by 25%... an aerospace and defense standout that just landed a potentially $80 billion contract… and a giant chipmaker building huge plants in the U.S.
Don’t Wait. Download FREE >>
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