Option Market Servisfirst Bancshares Inc Risk Hits A Lowered Level

Option Market: ServisFirst Bancshares Inc Risk Hits A Lowered Level

ServisFirst Bancshares Inc (NASDAQ:SFBS) Risk Hits A Lowered Level

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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 ServisFirst Bancshares Inc (NASDAQ:SFBS) .

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

We also take a peek at the implied vol for the Financials ETF (XLF), our broad based proxy for SFBS.

S&P 500 IV30     9.06%
Nasdaq 100 IV30     10.37%
XLF IV30     15.31%

SFBS HV 30     30.29%
SFBS Current IV30     28.15%
52 Week Low IV30     16.93%
52 Week High IV30     64.09%

The risk as reflected by the option market has hit a lowered level relative to the company's past. The option market reflects a 95% confidence interval stock price range of ($38.40, $43.70) 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.

The IV30® is the risk reflected by the option market in the stock price for the next 30 calendar days -- it's forward looking. ServisFirst Bancshares Inc shows an IV30 of 28.2%, which is a lowered level for the company relative to its past.

The option market for SFBS has shown an IV30 annual low of 16.9% and an annual high of 64.1%, meaning that SFBS is at the 24% percentile right now. Here's a table of the data before we dig into the risk rating further.

Current IV30    
Low IV30    
High IV30   
28.2% 16.9% 64.1%

The option market reflects less risk in the next 30 calendar days for ServisFirst Bancshares Inc (NASDAQ:SFBS) than on average.
Further, if we look backwards, the stock has a realized 30-day historical volatility, called the HV30, of 30.29%.

We have a situation now where the IV30 is depressed relative to the past and at the same time the option market reflects the likelihood of a smaller stock movement in the next 30-days than the stock has realized in the last 30-days. Let's turn to a chart to see what's going on.
Note how similar the forward risk for ServisFirst Bancshares Inc is priced (28.2%) compared to what happened just in the last 30-days (30.3%).

ServisFirst Bancshares Inc Risk Rating
The SFBS risk rating is at 2.5, where the rating goes from one (the lowest risk) to five (the highest risk). The driving factors for the 2.5 rating are:

The IV30 is below the annual average.
The IV30 is below 30%.
The HV30 is above the annual average.
The stock has moved +30.1% over the last 3-months which does indicate some elevated risk.