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MGIC Investment Corporation Risk Points versus Financials




MGIC Investment Corporation (NYSE:MTG) Risk Points versus Financials (XLF)

Date Published:


PREFACE
This is a scatter plot analysis of the critical risk points from the option market for MGIC Investment Corporation (NYSE:MTG) compared to its own past and the Financials ETF. In order to examine the forward looking risk for MGIC Investment Corporation (NYSE:MTG) the next 30-days, we must look to the option market.

Now, before we dive into the analysis on MTG, we make one critical note since we're talking about options:



Option trading isn't about luck -- this four 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 MGIC Investment Corporation (NYSE:MTG) , 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 MGIC Investment Corporation (NYSE:MTG) . We start by noting that MTG is in the banks sector which means along with some other industries we also compare the company to the closest match we could find, which was the Financials ETF (XLF) as a proxy for MGIC Investment Corporation.

We have highlighted the IV30® for XLF and for MTG in the table below.


SNAPSHOT SUMMARY
CONTEXT: THE INDICES
S&P 500 (SPY) IV30     11.15%
Nasdaq 100 (QQQ) IV30     12.44%
Financials ETF (XLF) IV30     17.29%
Biotech (IBB) IV30     18.5%


MGIC Investment Corporation (NYSE:MTG)
MTG 52 Week Low IV30     25.62%
MTG Current IV30     34.43%
MTG 52 Week High IV30     65.61%

MTG Current HV30     25.13%

MGIC Investment Corporation 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 MGIC Investment Corporation.
The black point is the current 30-day implied volatility for the Financials ETF (XLF).
The red point is the 52 week low in IV30® for MGIC Investment Corporation.
The green point is the 52 week high in IV30® for MGIC Investment Corporation.

The various other scatter plot points in the middle give us risk context outside of the banks 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 MGIC Investment Corporation is above all the indices we have charted including the Financials ETF (XLF).

* We can further see that the current IV30 for MGIC Investment Corporation of 34.43% is closer to the annual low of 25.62% than the annual high of 65.61%. 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 Financials ETF is between [13.25%, 28.77%] while MGIC Investment Corporation has had a range of [25.62%, 65.61%].

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 MGIC Investment Corporation (NYSE:MTG) lies relative to the last year, and the various major stock groupings and the Banks sector without using time series data, which can confuse the information.