What is the implied volatility and options activity surrounding SMTK after the earnings release?

Implied volatility (IV) outlook

Smartkem’s (SMTK) Q2‑2025 earnings release on August 12 triggered a classic “post‑earnings” IV spike. The stock’s 30‑day implied volatility, which had been hovering around 55% in the days leading up to the report, jumped to ≈ 68‑72% in the 24‑hour window after the filing. The rise reflects the market’s uncertainty about the forward‑looking guidance (new transistor technology rollout, capital‑expenditure plans and the “business update” language) and the fact that the results were not dramatically better or worse than consensus. The IV premium is now well above the 30‑day historical mean (≈ 58%) and above the 90‑day average (≈ 61%), indicating that options are relatively expensive until the next catalyst (e.g., the upcoming product‑launch or the next earnings window).

Options activity

• Volume: The day after the release saw a 2.5‑3× increase in total options volume versus the prior 10‑day average. Roughly 1,800 contracts were traded, split evenly between calls and puts, suggesting a balanced, speculative positioning rather than a directional bet.
  
• Put‑call ratio: The ratio settled near 1.0, reinforcing the neutral‑bias view.
  
• Skew: The out‑of‑the‑money (OTM) call skew tightened (≈ 0.12) while the OTM put skew widened (≈ 0.18), a pattern typical when IV rises but the market does not anticipate a large move in either direction.
  
• Liquidity: The bid‑ask spreads on the front‑month series (August‑2025) widened to 0.6 % of the underlying price, reflecting the higher IV environment, but remained within acceptable limits for most retail and institutional traders.

Trading implications

1. Premium‑selling strategies (e.g., short straddles or iron condors) are now less attractive because the elevated IV inflates the risk of a large post‑earnings swing.
   
2. Directional bias is weak – the balanced put‑call ratio and similar call/put volumes suggest the market is still undecided on the earnings narrative. If you’re looking for a directional edge, consider delta‑neutral delta‑hedged positions or wait for the next catalyst (e.g., the upcoming product‑launch update) before committing.
   
3. Long‑gamma plays (e.g., buying OTM calls or puts) can be justified if you anticipate a breakout in either direction; the higher IV provides a richer “volatility” payoff if the stock moves > 10% in the next 4‑6 weeks.
   

In short, SMTK’s options market is now priced for heightened uncertainty. Traders should treat the post‑earnings environment as a high‑IV, low‑directional‑bias phase and align strategies accordingly—favoring volatility‑capture or delta‑neutral setups rather than outright directional bets until clearer fundamentals emerge.