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Tuesday, October 7, 2014

Larger-than-usual move for Alcoa shares expected after results, (NYSE: AA)

Alcoa Inc's shares are expected to move nearly twice as much as they have following other recent earnings reports when the aluminum producer reports third quarter financial results on Wednesday. Shares of Alcoa, which have risen about 51 percent for the year-to-date, were up about 1 percent at $16.12 on Tuesday.The cost of a near-term Alcoa straddle, a strategy in which an investor buys an at-the-money put option and a similar call option, suggests a move of about 4.9 percent in either direction by Oct. 10. Over the last eight quarters, Alcoa shares have on average moved 2.8 percent the day after earnings.Trading in Alcoa's shares has been more volatile lately as it hit a new 52-week high. The stock has dropped more than 7 percent since Sept. 5 as investors worry about global growth trends and the dollar's strength, which has hurt the shares of materials companies, including Alcoa."The option market is pricing in elevated risk for this earnings cycle relative to many of the prior cycles in the last two-years," said Ophir Gottlieb, chief executive officer at Los Angeles-based Capital Market Laboratories LLC.

Alcoa Inc. (Alcoa) is engaged in lightweight metals, products and solutions. Shares of AA traded higher by 0.19% or $0.03/share to $16.02. In the past year, the shares have traded as low as $7.88 and as high as $17.36. On average, 17721600 shares of AA exchange hands on a given day and today's volume is recorded at 12955493.