McGraw Hills (MHP) is under fire and implied volatility in the options on the stock is up sharply on news its S&P unit is likely to face civil charges related to mortgage-bond ratings. Moody’s shares are also under fire (see MCO color) and MHP dropped $7.79 to $50.55 on heavy turnover of more than 12 million shares. 8,300 puts and 1,300 calls traded on the New York-based publishing company, which is 5X the daily average. Most of the flow has been in smaller lots. The top trade is a multi-exchange sweep of 444 Feb 55 puts for 57 cents per contract just as the news broke when the stock was still trading north of $57. The contract now fetches $5.70 (a tenbagger in a little more than an hour?) 2,187 Feb 55 puts now traded on the stock against 162 in open interest. March 50 and Feb 52.5 puts are the next most actives in MHP and implied volatility in the options on the stock is up 66 percent to 34.
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.