Facebook reports Q2 earnings tomorrow. OTAS is highlighting that despite the stock price being divergent with Volatility over the past month as the price has pulled back from the highs recently, an increase in volatility may be pointing to something else.
Filtering the Dashboard for Events this week and then sorting by Divergence, FB US was one name of interest. The stock has performed better than other social media names post the Q1 earnings season and has only recently become overbought. There was a technical signal that fired four days ago which shows the stock as overbought. However, with our backtesting over the past 9 years, the stock actually continues to trade higher 71% of the time.
Digging into the Volatility,we see that the stock’s 3M implied vol is higher than its peers by over 2 standard deviations, and its own absolute level is higher than normal. However, both the Upside Skew and Downside Skew are at extreme levels, highlighting potential positives to the stock, as investors are paying up for upside and paying lower prices for downside protection. Looking at the Top Ten Traded Volume for yesterday, the most active contracts are the near dated out of the money calls.