Live Nation Entertainment, Inc. (LIVE) is a producer of live music concerts worldwide. It operates in five segments: Concerts, Ticketing, Artist Nation, eCommerce and Sponsorship.
This is a vol note, specifically an elevated vol note with an unusual earnings vol pricing. Let's start with the Charts Tab (twelve months) is below. The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).
On the stock side we can see an incredibly volatile ride, yet not necessarily incredible returns. The stock was trading $7.68 six months ago, so it's up 8.2% in that time frame.
On the vol side we can see that the implied tends to trade above both of the historical realized vol measures. Recently, the IV30™ has spiked. The 52 wk range in IV30™ is [38.83%, 85.82%], putting the current level in the 70th percentile.
What's odd is the term structure... Let's turn to the Skew Tab.
We can see that there is a monotonic vol increase from the back to the front. And why is that weird?... As far as I can tell, the next earnings release is due out in the Nov cycle. Last year earnings were been released on 11-3-11 following a 8-8-11 prior release. The last earnings date for LYV was 8-7-12, so it's a reasonable expectation that the following report will also be in Nov. All that said, the Oct vol is elevated to Nov (and Jan' 13). Hmmm...
Let's turn to the Options Tab, for completeness.
Across the top we can see the monthly vols are priced to 83.30%, 61.78% and 53.13%, respectively for Oct, Nov and Jan'13. That's... different. There is clearly a known vol event embedded in the Oct options due out before Nov and more "risky" than the earnings announcement. Either that, or the earnings announcement is due out in Oct. Either way, this one feels like it's worth a closer look.
Disclosure: This is trade analysis, not a recommendation.
This is a vol note, specifically an elevated vol note with an unusual earnings vol pricing. Let's start with the Charts Tab (twelve months) is below. The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).
On the stock side we can see an incredibly volatile ride, yet not necessarily incredible returns. The stock was trading $7.68 six months ago, so it's up 8.2% in that time frame.
On the vol side we can see that the implied tends to trade above both of the historical realized vol measures. Recently, the IV30™ has spiked. The 52 wk range in IV30™ is [38.83%, 85.82%], putting the current level in the 70th percentile.
What's odd is the term structure... Let's turn to the Skew Tab.
We can see that there is a monotonic vol increase from the back to the front. And why is that weird?... As far as I can tell, the next earnings release is due out in the Nov cycle. Last year earnings were been released on 11-3-11 following a 8-8-11 prior release. The last earnings date for LYV was 8-7-12, so it's a reasonable expectation that the following report will also be in Nov. All that said, the Oct vol is elevated to Nov (and Jan' 13). Hmmm...
Let's turn to the Options Tab, for completeness.
Across the top we can see the monthly vols are priced to 83.30%, 61.78% and 53.13%, respectively for Oct, Nov and Jan'13. That's... different. There is clearly a known vol event embedded in the Oct options due out before Nov and more "risky" than the earnings announcement. Either that, or the earnings announcement is due out in Oct. Either way, this one feels like it's worth a closer look.
Disclosure: This is trade analysis, not a recommendation.