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Option Market: Carriage Services Inc Risk Hits A Substantially Lowered Level




Carriage Services Inc (NYSE:CSV) Risk Hits A Substantially Lowered Level

Date Published:

PREFACE
This is a proprietary risk rating for the next 30-days built by Capital Market Laboratories (CMLviz) based on a large number of interactions of data points, many of which come directly from the option market for Carriage Services Inc (NYSE:CSV) .




The risk as reflected by the option market has hit a substantially lowered level relative to the company's past. The option market reflects a 95% confidence interval stock price range of ($22.50, $25.90) within the next 30 calendar days.


While the option market risk rating is on the low side, we note that companies in this situation are still susceptible to sudden stock move risk, it's simply the probability of that large stock move is depressed. Buyers of options and volatility may find these prices more attractive than at other times.

CSV OPTION MARKET RISK
The short-term risk for a stock is reflected in the option market by a measure called the 30-day implied volatility or IV30®. The IV30 is the RISK reflected by the option market in the stock price for the next 30 calendar days -- it's forward looking. Carriage Services Inc shows an IV30 of 30.5%, which is a substantially lowered level for the company relative to its past.

The option market for CSV has shown an IV30 annual low of 22.3% and an annual high of 82.2%, meaning that CSV is at the 14% percentile right now. Here's a table of the data before we dig into the risk rating further.

CSV
Current IV30    
CSV
Low IV30    
CSV
High IV30   
30.5% 22.3% 82.2%

The option market reflects substanially less risk in the next 30 calendar days for Carriage Services Inc (NYSE:CSV) than on average. Further, if we look backwards, the stock has a realized 30-day historical volatility, called the HV30, of 21.86%.

We have an unusual situation now where the IV30 is substantially depressed relative to the past, but even with that risk pricing, the option market reflects the likelihood of more stock movement in the next 30-days than it has in the last 30-days. Let's turn to a chart to see what's going on.
 
Note how much higher the forward looking risk for Carriage Services Inc is priced (30.5%) compared to what happened just in the last 30-days (21.9%).Note how similar the forward risk for Carriage Services Inc is priced (30.5%) compared to what happened just in the last 30-days (21.9%).

Carriage Services Inc Risk Rating
The CSV risk rating is at 2, where the rating goes from one (the lowest risk) to five (the highest risk). The driving factors for the 2 rating are:

The IV30 is below the 20th percentile.
The HV30 is below the annual average.
The HV30 is below 30%.
The IV30 is above the HV30.
The stock has moved +9.1% over the last 3-months which does indicate some elevated risk.