Blackstone, Inc. (BX), Trending Stock Report

Blackstone, Inc. (BX) appeared on our list of compressed stocks this morning. This is interesting for a few reasons. BX has a history of making big moves after a compression signal. Plus, there are multiple potential catalysts coming up that could cause a big move in BX share prices.

BX is an alternative credit company that uses real estate holdings as collateral. That makes the company sensitive to the Fed’s interest rate policy. The company also has an earnings report scheduled for July 18^th. Looking at the term structure chart on page 5, you will see that options expiring September 20^th are cheaper than other expirations. In fact, investors may be underestimating the potential moves of BX with the upcoming earnings report, and the mountains of inflation data that could influence the Fed’s interest rate policy between now and September 20^th.

This MDM graph compares the modeled expectations of current options prices (the orange line) to the actual movement of BX’s stock price over the past 2 years. You can see that the actual behavior (the blue histogram) shows us that BX made big moves much more frequently than the modeled options prices expect. This tells us that option buyers have the advantage if BX continues to behave the way it did over the last 2 years.

This Volatility Cone shows us that the volatility expectations (the yellow dots) for each term are below the 2-year historical volatility average. To learn more about the Volatility Cone, click here. This confirms that BX options are relatively inexpensive. In fact, the 3-month term is nearer to the extremely low historical volatility over the past 2 years.

This Volatility Term Structure shows us the implied volatility of the at-the-money options for September 20^th expiration are the least expensive relative to all other expirations. To learn more about Volatility Term Structure, click here. Because we are buying options on BX, we can get the biggest advantage by purchasing options at the September monthly expiration.

BX share prices are compressed. The stock has a history of making big moves after a compression signal. There are many potential catalysts for a big move in BX share prices between now and September 20^th that give option buyers a good chance for big profits.

To get the details on today’s trades, be sure to read today’s ODDS Online Daily Option Trade Idea.