Implied volatility in Molycorp (MCP) is rallying, as shares fall on a JP Morgan downgrade. The firm cut its rating on the stock to Neutral and lowered its price target to $66 from $105 per share. JP Morgan cites lower prices for rare earth materials after a surge in the Spring. MCP is getting hammered for a $10.17 per share loss and now trades at six-month lows of $42.84. Options volume is 36,000 calls and 22,000 puts. Most of the action has been in smaller sizes. The top trade is a 500-lot of Weekly (9/23) $50 calls at the 55-cent asking price. 3,530 traded. Weekly 47.5 calls have also traded 3,530X. Oct 50, 55, and 57.5 calls are the next most actives. Meanwhile, implied volatility in MCP has rallied 36 percent to 86, but remains well below the extremes of 125 seen on 8/8.
About the Author (Author Profile)
Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.