The options market is getting excited about an ethanol producer and dental technology, according to one expert.
Traders seem to think Pacific Ethanol is due for more action in the coming weeks, suggested Rebecca Darst of Interactive Brokers. Put (the option to sell a stock in the future) and call (the option to buy) activity has been high, she said.
"Pacific Ethanol, which is a stock that has really taken a beating over the past 52 weeks, was able to pull off less dire than many had anticipated earnings, and that occasioned massive upside in the sector," Darst said Wednesday on CNBC's "Squawk on the Street." (Click here for Pacific Ethanol earnings).
"Its options have moved on very high volumes for the past two days running, trading at 21 times the normal on Monday, 5 times the norm yesterday. A couple of phenomena that were very interesting to note here with Pacific Ethanol: Usually after a company reports earnings, you'll see that implied volatlity hits a crisis point, or hits a high before the numbers come out, and then dissipates very quickly thereafter. In the case of Pacific Ethanol, we saw its implied volatility actually go up after the numbers on Monday, and continued higher yesterday, which was a fantastic opportunity for a lot of people who were interested in trading both sides of the volatility equation. We also saw massive interest in calls -- of course, there's been some speculation that may be due to short covering in the market -- still, there are a number of scenarios presenting themselves in the market that are interesting to track."