Emerge Energy Services LP (NYSE:EMES) Risk Points versus Energy (XLE)Date Published: 2017-04-21
This is a scatter plot analysis of the critical risk points from the option market for Emerge Energy Services LP (NYSE:EMES) compared to its own past and the Energy ETF. In order to examine the forward looking risk for Emerge Energy Services LP (NYSE:EMES) the next 30-days, we must look to the option market.
Now, before we dive into the analysis on EMES, we make one critical note since we're talking about options:
Option trading isn't about luck -- this three minute video will change your trading life forever: Option Trading and Truth
In the "Why This Matters" section at the end of this article on Emerge Energy Services LP (NYSE:EMES) , 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.
But that's at the end, now let's jump back into the risk point charting and number crunching for Emerge Energy Services LP (NYSE:EMES) . We start by noting that EMES is in the oil, gas and consumable fuels sector which means along with some other industries we also compare the company to the closest match we could find, which was the Energy ETF (XLE) as a proxy for Emerge Energy Services LP.
We have highlighted the IV30® for XLE and for EMES in the table below.
|CONTEXT: THE INDICES|
|S&P 500 (SPY)||IV30||11.15%|
|Nasdaq 100 (QQQ)||IV30||12.44%|
|Energy ETF (XLE)||IV30||18.35%|
|Emerge Energy Services LP (NYSE:EMES)|
|EMES 52 Week Low||IV30||61.91%|
|EMES 52 Week High||IV30||161.64%|
|Emerge Energy Services LP 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 Emerge Energy Services LP.
The black point is the current 30-day implied volatility for the Energy ETF (XLE).
The red point is the 52 week low in IV30® for Emerge Energy Services LP.
The green point is the 52 week high in IV30® for Emerge Energy Services LP.
The various other scatter plot points in the middle give us risk context outside of the oil, gas and consumable fuels 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 Emerge Energy Services LP is above all the indices we have charted including the Energy ETF (XLE).
* We can further see that the current IV30 for Emerge Energy Services LP of 82.3% is closer to the annual low of 61.91% than the annual high of 161.64%. 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 Energy ETF is between [13.82%, 30.9%] while Emerge Energy Services LP has had a range of [61.91%, 161.64%].
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 Emerge Energy Services LP (NYSE:EMES) lies relative to the last year, and the various major stock groupings and the Oil, Gas and Consumable Fuels sector without using time series data, which can confuse the information.