Fortune Brands Home & Security Inc (NYSE:FBHS) Price Volatility Hits An Extreme LowDate Published: 2017-04-20
Stock Alert - But Not What You Might Think
Before we cover the full analysis we make a quick alert here that Fortune Brands Home & Security Inc (NYSE:FBHS) has seen its stock price move at a tumbling low level. We'll go through the details below -- but that's the lede -- the stock has been unusally quiet. If there was a post it note to summarize the stock movement in the last 30-days it would likely read "quiet time... too quiet?" The HV20 is 12.39% verus the HV20 of the S&P 500 at 5.78%.
Another bit to this alert of quiet time, which we cover in the article, is that while the historical volatility may be a tumbling low level, the real question that needs to be answered for option traders is not if the HV20 is low, but rather if the implied volatility that is priced for the next 30-days accuratley reflects what we're about to see in the stock for the next month.
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This is a proprietary realized volatility rating created by Capital Market Laboratories (CMLviz) based on a large number of data interactions for Fortune Brands Home & Security Inc (NYSE:FBHS) . We examine the little used gem of daily stock volatility over a 20-day and 30-day trading period, as well as comparisons to the last year and the actual stock returns over the last three- and six-months and the S&P 500 and Nasdaq 100 indices.
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As a heads up, in the "Why This Matters" section at the end of this article on Fortune Brands Home & Security Inc (NYSE:FBHS) , we're going to take a step back and show really clearly that there is actually a lot less "luck" in successful option trading than most people are aware of. This idea of an "option trading expert" is vastly over complicated so those with the information advantage can continue to profit at the expense of the rest.
But before that, let's turn back to FBHS. Here are the exact steps that led us to this rating, and whether it's a risk alert or a holding pattern.
FBHS Recent Price Volatility
Price volatility using proprietary measures has hit a tumbling low level. While stocks with FBHS's profile see a short-term quiet period, this is also one of those times when a shake out volatility move could be on the horizon. To that point, we do note that FBHS is showing unusally low volatility in the last month relative to its past. Let's take a deep dive into some institutional level volatility measures for Fortune Brands Home & Security Inc (NYSE:FBHS) .
Fortune Brands Home & Security Inc Stock Performance
FBHS is up +13.3% over the last three months and up +15.3% over the last six months. The stock price is up +6.5% over the last year. The current stock price is $62.15.
FBHS Step 1: Stock Returns
↪ The 3-month stock return of +13.3% has a small impact on the price volatility rating for FBHS.
↪ The small difference between the 3-month and 6-month stock returns does not impact the price volatility rating for FBHS.
FBHS Step 2: Daily Price Volatility Level
The HV30® takes the stock's day to day historical volatility over the last 30-days and then annualizes it. The HV20 looks back over just 20-days -- a shorter time period. Here is the breakdown for Fortune Brands Home & Security Inc (NYSE:FBHS) and how the day-by-day price historical volatilities have impacted the rating:
↪ The HV20 of 9.4% is especially low and has a large downward impact on FBHS's volatility rating.
FBHS Step 3: Fortune Brands Home & Security Inc HV20 Compared to Indices
* The HV20 for FBHS is substantially larger than that for both the S&P 500 and the NASDAQ 100 which raises the volatility rating.
* The HV20 for FBHS is larger than that for the Materials ETF (XLB) which raises the volatility rating a little.
Here is summary data in tabular and chart format.
| S&P 500
| NASDAQ 100
FBHS Step 4: Daily Volatility Percentiles and Highs
We also examine the annual high of the HV30 in our rating but in this case the 52 week high in HV30 for FBHS is 30.1%, which is not enough to impact the price volatility rating.
Here is summary data in tabular and chart format.
Final Price Volatility Percentile Level: FBHS
The final evolution of the volatility rating for Fortune Brands Home & Security Inc is a comparison of the HV30 value relative to its past, which is neatly summarized in the percentile -- a scoring mechanism that goes from a low of 1 to a high of 100.
↪ The HV30 percentile for Fortune Brands Home & Security Inc is 0%, which means the stock has seen very low volatility in its price movement relative to its own past and that has a dampening impact on the price volatility rating.
Fortune Brands Home & Security Inc Realized Volatility Percentiles