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Option Market: Bel Fuse Inc Risk Hits An Inflection Point




Bel Fuse Inc (NASDAQ:BELFB) Risk Hits An Inflection Point

Date Published:

PREFACE
We're going to look at 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 Bel Fuse Inc (NASDAQ:BELFB) .


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In the "Why This Matters" section at the end of this article on Bel Fuse Inc (NASDAQ:BELFB) 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 and we'll talk about how superior returns are earned.

But first, let's turn back to BELFB and the company's risk rating:

We also take a peek at the implied vol for the Technology ETF (XLK), our broad based proxy for BELFB.





SNAPSHOT SUMMARY
S&P 500 IV30     8.62%
Nasdaq 100 IV30     10.18%
XLK IV30     10.42%

BELFB HV 30     34.53%
BELFB Current IV30     41.2%
52 Week Low IV30     22.44%
52 Week High IV30     129.89%


The risk as reflected by the option market has hit an inflection point relative to the company's past. The option market reflects a 95% confidence interval stock price range of ($28.00, $33.90) within the next 30 calendar days.

BELFB OPTION MARKET RISK
The IV30® is the risk reflected by the option market in the stock price for the next 30 calendar days -- it's forward looking. Bel Fuse Inc shows an IV30 of 41.2%, which is an inflection point for the company relative to its past.

The option market for BELFB has shown an IV30 annual low of 22.4% and an annual high of 129.9%, meaning that BELFB is at the 17% percentile right now. Here's a table of the data before we dig into the risk rating further.

BELFB
Current IV30    
BELFB
Low IV30    
BELFB
High IV30   
41.2% 22.4% 129.9%

The option market reflects substanially less risk in the next 30 calendar days for Bel Fuse Inc (NASDAQ:BELFB) than on average.
Further, if we look backwards, the stock has a realized 30-day historical volatility, called the HV30, of 34.53%.




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 Bel Fuse Inc is priced (41.2%) compared to what happened just in the last 30-days (34.5%).

Bel Fuse Inc Risk Rating
The BELFB risk rating is at 3, where the rating goes from one (the lowest risk) to five (the highest risk). The driving factors for the 3 rating are:

The IV30 is below the 20th percentile.
The IV30 is above 40%.
The HV30 is below the annual average.
The IV30 is above the HV30.
The stock has moved +21.4% over the last 3-months which does indicate some elevated risk.