Preferred Bank (NASDAQ:PFBC) Risk Points versus Financials (XLF)Date Published: 2017-01-21
This is a scatter plot analysis of the critical risk points from the option market for Preferred Bank (NASDAQ:PFBC) compared to its own past and the Financials ETF. In order to examine the forward looking risk for Preferred Bank (NASDAQ:PFBC) the next 30-days, we must look to the option market.
Now, before we dive into the analysis on PFBC, we make one critical note since we're talking about options:
In the "Why This Matters" section at the end of this article on Preferred Bank (NASDAQ:PFBC) , we're going to take a step back and show in great specificity that there is actually a lot less "luck" in successful option trading than many people know. The whole concept of an "option trading expert" is vastly over complicated in order to dissuade non-professional traders from gaining the knowledge that the pros have.
But that's at the end, now let's jump back into the risk point charting and number crunching for Preferred Bank (NASDAQ:PFBC) . We start by noting that PFBC is in the banks sector which means along with some other industries we also compare the company to the closest match we could find, which was the Financials ETF (XLF) as a proxy for Preferred Bank.
We have highlighted the IV30® for XLF and for PFBC in the table below.
|CONTEXT: THE INDICES|
|S&P 500 (SPY)||IV30||9.06%|
|Nasdaq 100 (QQQ)||IV30||11.44%|
|Financials ETF (XLF)||IV30||14.95%|
|Preferred Bank (NASDAQ:PFBC)|
|PFBC 52 Week Low||IV30||20.79%|
|PFBC 52 Week High||IV30||58.22%|
|Preferred Bank 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 Preferred Bank.
The black point is the current 30-day implied volatility for the Financials ETF (XLF).
The red point is the 52 week low in IV30® for Preferred Bank.
The green point is the 52 week high in IV30® for Preferred Bank.
The various other scatter plot points in the middle give us risk context outside of the banks 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 Preferred Bank is above all the indices we have charted including the Financials ETF (XLF).
* We can further see that the current IV30 for Preferred Bank of 30.84% is closer to the annual low of 20.79% than the annual high of 58.22%. 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 Financials ETF is between [13.25%, 35.78%] while Preferred Bank has had a range of [20.79%, 58.22%].
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 Preferred Bank (NASDAQ:PFBC) lies relative to the last year, and the various major stock groupings and the Banks sector without using time series data, which can confuse the information.