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The Medicines Company Risk Points versus Health Care




The Medicines Company (NASDAQ:MDCO) Risk Points versus Health Care (XLV)

Date Published:


PREFACE
This is a scatter plot analysis of the critical risk points from the option market for The Medicines Company (NASDAQ:MDCO) compared to its own past and the Health Care ETF. In order to examine the forward looking risk for The Medicines Company (NASDAQ:MDCO) the next 30-days, we must look to the option market.

We also note that MDCO is in the biotechnology and pharmaceutical sector which means along with some other industries we also compare the company to the closest match we could find, which was the Health Care ETF (XLV) as a proxy for The Medicines Company.

We have highlighted the IV30® for XLV and for MDCO in the table below.


SNAPSHOT SUMMARY
CONTEXT: THE INDICES
S&P 500 (SPY) IV30     11.21%
Nasdaq 100 (QQQ) IV30     13.01%
Health Care ETF (XLV) IV30     14.73%
Biotech (IBB) IV30     26.19%


The Medicines Company (NASDAQ:MDCO)
MDCO 52 Week Low IV30     48.17%
MDCO Current IV30     91.73%
MDCO 52 Week High IV30     167.34%

MDCO Current HV30     49.68%

The Medicines Company Implied Risk Scatter Plot
(a new risk chart, built for option traders)



Scatter Plot Risk Legend
The blue point is the current 30-day implied volatility for The Medicines Company.
The black point is the current 30-day implied volatility for the Health Care ETF (XLV).
The red point is the 52 week low in IV30® for The Medicines Company.
The green point is the 52 week high in IV30® for The Medicines Company.

The various other scatter plot points in the middle give us risk context outside of the biotechnology and pharmaceutical sector.

The IV30® is the risk reflected by the option market in the stock price for the next 30 calendar days.

* We can see that the risk as reflected by the option market for the next 30-days for The Medicines Company is above all the indices we have charted including the Health Care ETF (XLV).

* We can further see that the current IV30 for The Medicines Company of 91.73% is closer to the annual low of 48.17% than the annual high of 167.34%. Simply stated, this means that the option market is pricing less risk than the average over the past year.

* For some context, we note that the annual range in IV30® for the Health Care ETF is between [10.95%, 27.57%] while The Medicines Company has had a range of [48.17%, 167.34%].

Get this same analysis on any ticker here:


A New Kind of Risk Point Chart
This is chart was developed for the trader. It allows us to easily see where the forward looking risk for The Medicines Company (NASDAQ:MDCO) lies relative to the last year, and the various major stock groupings and the Biotechnology and Pharmaceutical sector without using time series data, which can confuse the information.