30 October 2012 2:10pm
QBE touched a low of $12.95 this morning and has recovered slightly to be trading a bit above $13.00
Top of mind for traders are: i the potential liability of SuperStorm on QBE’s earnings ii will it meet is FY12 guidance
Well, though impact of storm is still too early to tell, but QBE has 2 defenses for now: catastrophes had been light in 2012 and it has increased its provision from premium for 8% ish to 10% ish. So, at current state of play, yes, it’s likely to meet FY12 guidance.
This uncertainty has caused Implied Volatility (IV) in QBE to spike
Rrecent low of IV when stock hit $14, was 19%
last few days as stock fell a dollar from $14 on 19 October, IV has spiked to 24% yesterday.
Spiked IV, prime for options selling.
Those who don’t hold a bearich view on the stock, had been selling
Dec12 $13 and Dec12 $13.25 puts