Skip to main content

Headline news on Tuesday stated that

Toronto-Dominion Bank

(TD) - Get Toronto-Dominion Bank Report

is buying up the finance arm of Chrysler. The market liked that news and the juicy returns on the car loan book they will acquire. I guess everyone figures the paper has already been marked down and TD is getting a good buy.

Trolling in Aqumin's AlphaVision Pro (same beta version for all who want to try it) I came across Bank of Montreal (BMO) - Get Bank of Montreal Report yesterday in the above average option volume view. This is the Aqumin view of price movement and volume but all of it, of course, is in a multi-layered quote. Taller buildings are moving more than the current implied volatility would indicate today (Percent value of today's move in one standard deviation). Green buildings are trading at 2x their 30-day average option volume.

Bank of Montreal (BMO) above average option volume

Source: Aqumin

View Chart

(If you want to learn more about 3D visualization of financial data visit


I highlighted TD, which the market liked and BMO which the market did not like over past week or so. BMO sold off sharply since they announced the acquisition of Marshall and Isley ( MI). BMO first popped up for me on Monday as the dominant mover (on a relative basis) in the financials on above average option volume. Enough for me to put it on a list to see what pans out. On Tuesday, it had a bit of a bounce on good option volume (second day in a row of healthy volume). My question is why is the market punishing a well managed bank like BMO for buying assets at the rock bottom? Also, I did not see any real rise in implied volatility. No panic. Note the change in 60-day historical volatility in the chart in the lower right hand side of the market landscape. Essentially the name has sharp gaps when it moves, and I think between now and  February, BMO goes back into some key portfolios (11x P/E and a 4%+ dividend yield) and with a couple of hops right back to $60.00.

TheStreet Recommends

Trades: Buy to open 3 BMO February 55 calls for $3.10 and sell to open 3 BMO February 60 calls for $0.55 on a 46 delta with BMO trading $57.50, or better.

I see implied volatility in here in the very low 20s, which is about the most I could pay for it. Risk level 1.

Some of you might ask why I am buying gamma/negative theta right before the holiday and this is more of a delta play than anything.

At the time of publication, Andrew Giovinazzi held no positions in the stocks or issues mentioned.

Andrew is the Executive Vice President of Business Development for Aqumin, where he participated in the design team to apply AlphaVision to the financial markets. For 15 years he was a member of the Pacific Exchange and the Chicago Board Options Exchange, where he actively made markets and traded in both equity and index options. At the same time Andrew started and ran the Designated Primary Market Marker post for Group One, Ltd. on the floor of the CBOE where it became one of the highest grossing posts for the company in 1992 and 1993. While in Chicago and San Francisco, Andrew was instrumental in creating and managing a training program that allowed Group One, Ltd. to dramatically increase its trader count over an eight year period. He left Group One, Ltd. to co-found Henry Capital Management in 2001.

OptionsProfits For actionable options trade ideas from a team of experts, visit TheStreet's OptionsProfits now.

Readers Also Like:

>>EU Debt Crisis Tops Options Stories for 2010

Readers Also Like:

>>It's Beginning to Look A Lot Like...

Readers Also Like:

>>Cramer's Dow 30 Prediction: 13K and Beyond