Magnite, Inc. (MGNI), Trending Stock Report

Magnite, Inc. (MGNI), an international omni-channel advertising company, appeared on our list of compressed stocks this morning. This is unusual because MGNI has not had a previous compression signal. This is the first time going back to 2014 that MGNI shares have given a compression signal.

This could be good news because it means that MGNI shares tend to move. Digging into the data, MGNI tends to make big moves around earnings announcements. The company is scheduled to announce earnings before the November 15^th options expiration. Right now, it looks like investors may be underestimating the potential for a big move before the November expiration. The earnings report could be a potential catalyst for a bigger-than-expected move.

This Volatility Term Structure chart for MGNI shows us the implied volatility for the at-the-money options for each expiration. This chart shows that options expiring on November 15^th have low volatility expectations and there is an earnings report due before that expiration. Investors may be underestimating the stock’s potential to make big moves around earnings.

This MDM graph compares the modeled expected distribution for future stock prices (the orange line) with the actual distribution of MGNI’s share prices over the past 4 years (the blue histogram). You can see that the actual stock movement shows that the stock tends to make bigger moves than November 15^th options prices expect. This is an option buying opportunity.

This Volatility Cone chart for MGNI compares implied volatility expectations for each term to the historical volatility for that same term. The blue line shows the average historical volatility, the purple lines show each HV measure’s highest high and the lowest low over the past 4 years. You can see that the two-month term (which is the term we are interested in) is below the 4-year historical average. This confirms that the options for that term are relatively inexpensive.

MGNI share prices are compressed for the first time. The stock has a history of making big moves around earnings. Options for the November 15^th expiration (the first expiration after earnings are due to be reported) are relatively cheap. This is an option buying situation.

To get the specific details and prices on today’s trade ideas, be sure to read today’s ODDS Online Daily Option Trade Idea.