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Mallinckrodt Public Limited Company Risk Points versus Health Care




Mallinckrodt Public Limited Company (NYSE:MNK) Risk Points versus Health Care (XLV)

Date Published:


PREFACE
This is a scatter plot analysis of the critical risk points from the option market for Mallinckrodt Public Limited Company (NYSE:MNK) compared to its own past and the Health Care ETF. In order to examine the forward looking risk for Mallinckrodt Public Limited Company (NYSE:MNK) the next 30-days, we must look to the option market.

Now, before we dive into the analysis on MNK, 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 Mallinckrodt Public Limited Company (NYSE:MNK) , 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 Mallinckrodt Public Limited Company (NYSE:MNK) . We start by noting that MNK is in the biotechnology and pharmaceutical sector which means along with some other industries we also compare the company to the closest match we could find, which was the Health Care ETF (XLV) as a proxy for Mallinckrodt Public Limited Company.

We have highlighted the IV30® for XLV and for MNK in the table below.


SNAPSHOT SUMMARY
CONTEXT: THE INDICES
S&P 500 (SPY) IV30     11.15%
Nasdaq 100 (QQQ) IV30     12.44%
Health Care ETF (XLV) IV30     11.89%
Biotech (IBB) IV30     18.5%


Mallinckrodt Public Limited Company (NYSE:MNK)
MNK 52 Week Low IV30     34.75%
MNK Current IV30     45.72%
MNK 52 Week High IV30     81.77%

MNK Current HV30     28.58%

Mallinckrodt Public Limited Company 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 Mallinckrodt Public Limited Company.
The black point is the current 30-day implied volatility for the Health Care ETF (XLV).
The red point is the 52 week low in IV30® for Mallinckrodt Public Limited Company.
The green point is the 52 week high in IV30® for Mallinckrodt Public Limited Company.

The various other scatter plot points in the middle give us risk context outside of the biotechnology and pharmaceutical 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 Mallinckrodt Public Limited Company is above all the indices we have charted including the Health Care ETF (XLV).

* We can further see that the current IV30 for Mallinckrodt Public Limited Company of 45.72% is closer to the annual low of 34.75% than the annual high of 81.77%. 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 Health Care ETF is between [10.43%, 23.51%] while Mallinckrodt Public Limited Company has had a range of [34.75%, 81.77%].

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 Mallinckrodt Public Limited Company (NYSE:MNK) lies relative to the last year, and the various major stock groupings and the Biotechnology and Pharmaceutical sector without using time series data, which can confuse the information.