General Mills Inc (NYSE:GIS) Risk Points versus Consumer Staples (XLP)Date Published: 2017-04-21
This is a scatter plot analysis of the critical risk points from the option market for General Mills Inc (NYSE:GIS) compared to its own past and the Consumer Staples ETF. In order to examine the forward looking risk for General Mills Inc (NYSE:GIS) the next 30-days, we must look to the option market.
Now, before we dive into the analysis on GIS, 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 General Mills Inc (NYSE:GIS) . We start by noting that GIS is in the food, beverage and tobacco sector which means along with some other industries we also compare the company to the closest match we could find, which was the Consumer Staples ETF (XLP) as a proxy for General Mills Inc.
We have highlighted the IV30® for XLP and for GIS in the table below.
|CONTEXT: THE INDICES|
|S&P 500 (SPY)||IV30||11.15%|
|Nasdaq 100 (QQQ)||IV30||12.44%|
|Consumer Staples ETF (XLP)||IV30||10.98%|
|General Mills Inc (NYSE:GIS)|
|GIS 52 Week Low||IV30||15.22%|
|GIS 52 Week High||IV30||24.28%|
|General Mills 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 General Mills Inc.
The black point is the current 30-day implied volatility for the Consumer Staples ETF (XLP).
The red point is the 52 week low in IV30® for General Mills Inc.
The green point is the 52 week high in IV30® for General Mills Inc.
The various other scatter plot points in the middle give us risk context outside of the food, beverage and tobacco 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 General Mills Inc is in between the indices we have charted but is above the Consumer Staples ETF (XLP), which we use as a proxy for General Mills Inc.
* We can further see that the current IV30 for General Mills Inc of 17.5% is closer to the annual low of 15.22% than the annual high of 24.28%. 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 Consumer Staples ETF is between [8.36%, 17.91%] while General Mills Inc has had a range of [15.22%, 24.28%].
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 General Mills Inc (NYSE:GIS) lies relative to the last year, and the various major stock groupings and the Food, Beverage and Tobacco 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.