Jacobs Engineering Group Inc (NYSE:JEC) Risk Points versus Industrials (XLI)Date Published: 2017-04-21
This is a scatter plot analysis of the critical risk points from the option market for Jacobs Engineering Group Inc (NYSE:JEC) compared to its own past and the Industrials ETF. In order to examine the forward looking risk for Jacobs Engineering Group Inc (NYSE:JEC) the next 30-days, we must look to the option market.
Now, before we dive into the analysis on JEC, we make one critical note since we're talking about options:
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In the "Why This Matters" section at the end of this article on Jacobs Engineering Group Inc (NYSE:JEC) , 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 Jacobs Engineering Group Inc (NYSE:JEC) . We start by noting that JEC is in the construction and engineering sector which means along with some other industries we also compare the company to the closest match we could find, which was the Industrials ETF (XLI) as a proxy for Jacobs Engineering Group Inc.
We have highlighted the IV30® for XLI and for JEC in the table below.
|CONTEXT: THE INDICES|
|S&P 500 (SPY)||IV30||11.15%|
|Nasdaq 100 (QQQ)||IV30||12.44%|
|Industrials ETF (XLI)||IV30||14.61%|
|Jacobs Engineering Group Inc (NYSE:JEC)|
|JEC 52 Week Low||IV30||19.96%|
|JEC 52 Week High||IV30||31.16%|
|Jacobs Engineering Group 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 Jacobs Engineering Group Inc.
The black point is the current 30-day implied volatility for the Industrials ETF (XLI).
The red point is the 52 week low in IV30® for Jacobs Engineering Group Inc.
The green point is the 52 week high in IV30® for Jacobs Engineering Group Inc.
The various other scatter plot points in the middle give us risk context outside of the construction and engineering 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 Jacobs Engineering Group Inc is above all the indices we have charted including the Industrials ETF (XLI).
* We can further see that the current IV30 for Jacobs Engineering Group Inc of 28.04% is closer to the annual high of 31.16% than the annual low of 19.96%. 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 Industrials ETF is between [10.85%, 25.17%] while Jacobs Engineering Group Inc has had a range of [19.96%, 31.16%].
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 Jacobs Engineering Group Inc (NYSE:JEC) lies relative to the last year, and the various major stock groupings and the Construction and Engineering 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.