Schaeffer’s Option Blog: Palm Inc.’s Implied Volatility Soars as Puts Gain Traction

With expectations mounting heading into last weekend’s release of Palm Inc.’s (NASDAQ: PALM) Pre smartphone, options traders began to waver in their normally bullish leanings. Specifically, the stock’s Schaeffer’s Volatility Index (SVI) has jumped to 117.95% compared to the stock’s one-month historical volatility of 88.47%. This significant skew indicates that options are expensively priced in comparison to the stock’s historical performance.

In fact, the June 11 put currently carries an implied volatility of 133%, while the June 12 call has an implied volatility of 117% — indicating that demand has been higher for the stock’s puts.

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Contacts

Schaeffer’s Investment Research
Joseph Hargett, 513-589-3800
jhargett {at} sir-inc(.)com