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Implied Volatility Surging for Teck Resources (TECK) Stock Options

Zacks Equity Research
Updated
Ross Stores (ROST) has an impressive earnings surprise history and currently possesses the right combination of the two key ingredients for a likely beat in its next quarterly report.

Investors in Teck Resources Ltd (TECK)  need to pay close attention to the stock based on moves in the options market lately. That is because the Jan 19th, 2018, $4.00 Put had some of the highest implied volatility of all equity options today.

What is Implied Volatility?

Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.

What do the Analysts Think?

Clearly, options traders are pricing in a big move for Teck Resources shares, but what is the fundamental picture for the company? Currently, Teck Resources is a Zacks Rank #2 (Buy) in the  Mining - Miscellaneous industry that ranks in the Top 25% of our Zacks Industry Rank. Over the last 60 days, the Zacks Consensus Estimates for the current quarter has seen one upward versus four downward revision, taking it from 72 cents per shareto  94 cents in that period.

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Given the way analysts feel about Teck Resources right now, this huge implied volatility could mean there’s a trade developing. Oftentimes, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.

Looking to Trade Options?

Each week, our very own Dave Bartosiak gives his top options trades. Check out his recent live analysis and options trade for the NFLX earnings report completely free. See it here: Trading Netflix's (NFLX) Earnings with Optionsor check out the embedded video below for more details:


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Teck Resources Ltd (TECK) : Free Stock Analysis Report
 
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Zacks Investment Research