Implied Volatility Surging for Bilibili (BILI) Stock Options

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Investors in Bilibili Inc. BILI need to pay close attention to the stock based on moves in the options market lately. That is because the Mar 18, 2022 $25.00 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 Bilibili shares, but what is the fundamental picture for the company? Currently, Bilibili is a Zacks Rank #4 (Sell) in the Internet – Services industry that ranks in the Bottom 23% of our Zacks Industry Rank. Over the last 60 days, no analysts have increased their earnings estimates for the current quarter, while one analyst has revised the estimate downward. The net effect has widened our Zacks Consensus Estimate for the current quarter from a loss of 57 cents per share to a loss of 67 cents in that period.Given the way analysts feel about Bilibili 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?Check out the simple yet high-powered approach that Zacks Executive VP Kevin Matras has used to close recent double and triple-digit winners. In addition to impressive profit potential, these trades can actually reduce your risk.Click to see the trades now >>Zacks Top 10 Stocks for 2022In addition to the investment ideas discussed above, would you like to know about our 10 top picks for the entirety of 2022?From inception in 2012 through November, the Zacks Top 10 Stocks gained an impressive +962.5% versus the S&P 500’s +329.4%. Now our Director of Research is combing through 4,000 companies covered by the Zacks Rank to handpick the best 10 tickers to buy and hold. Don’t miss your chance to get in on these stocks when they’re released on January 3.Be First To New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bilibili Inc. Sponsored ADR (BILI): Free Stock Analysis Report To read this article on Zacks.com click here.
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