Apple Inc (NASDAQ:AAPL) Risk Points versus Technology (XLK)Date Published: 2017-02-3
This is a scatter plot analysis of the critical risk points from the option market for Apple Inc (NASDAQ:AAPL) compared to its own past and the Technology ETF. In order to examine the forward looking risk for Apple Inc (NASDAQ:AAPL) the next 30-days, we must look to the option market.
Now, before we dive into the analysis on AAPL, we make one critical note since we're talking about options:
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But that's at the end, now let's jump back into the risk point charting and number crunching for Apple Inc (NASDAQ:AAPL) . We start by noting that AAPL is in the information technology sector which means along with some other industries we also compare the company to the closest match we could find, which was the Technology ETF (XLK) as a proxy for Apple Inc.
We have highlighted the IV30® for XLK and for AAPL in the table below.
|CONTEXT: THE INDICES|
|S&P 500 (SPY)||IV30||9.41%|
|Nasdaq 100 (QQQ)||IV30||11.27%|
|Technology ETF (XLK)||IV30||11.72%|
|Apple Inc (NASDAQ:AAPL)|
|AAPL 52 Week Low||IV30||14.42%|
|AAPL 52 Week High||IV30||32.34%|
|Apple Inc 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 Apple Inc.
The black point is the current 30-day implied volatility for the Technology ETF (XLK).
The red point is the 52 week low in IV30® for Apple Inc.
The green point is the 52 week high in IV30® for Apple Inc.
The various other scatter plot points in the middle give us risk context outside of the information technology 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 Apple Inc is in between the indices we have charted but is above the Technology ETF (XLK), which we use as a proxy for Apple Inc.
* We can see in the risk points chart above that the IV30 for Apple Inc has collapsed to the annual low. In English, the blue point is at the same level as the red point which means the option market reflects less stock movement in the next 30-days than it has over the past year.
* For some context, we note that the annual range in IV30® for the Technology ETF is between [10.12%, 28.86%] while Apple Inc has had a range of [14.42%, 32.34%].
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 Apple Inc (NASDAQ:AAPL) lies relative to the last year, and the various major stock groupings and the Information Technology sector without using time series data, which can confuse the information.
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.