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Option Market Alert: American Vanguard Corporation Implied Price Swing Hits An Amplified Level




American Vanguard Corporation (NYSE:AVD) Risk Hits An Amplified Level

Date Published:

No Risk Alert Here: Before we dive into any analysis we simply note that American Vanguard Corporation (NYSE:AVD) risk is neither elevated nor depressed. We'll detail it below -- but that's the lede -- the option market is in a holding period with an IV30 of 65.01% verus the IV30 of the S&P 500 at 11.15%. You might say that the post it note for American Vanguard Corporation would read, "holding pattern." The annual high for American Vanguard Corporation IV30 is 71.69%.



To skip ahead and see if buying or selling options has been a winner in American Vanguard Corporation, you can go here: Geting serious about option trading.

PREFACE
This is a proprietary risk rating and risk alert system that looks forward for the next month -- or really 30 days to be exact -- and that includes weekends. The system is based on multiple interactions of data points, many of which come directly from the option market for American Vanguard Corporation (NYSE:AVD) . The creator of this model is Capital Market Laboratories (CMLviz.com).


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 American Vanguard Corporation 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. The whole concept of an "option trading expert" is vastly over complicated and we'll talk about how superior returns are earned.

But first, let's turn back to AVD and the company's risk rating:

We also take a peek at the implied vol for the Materials ETF (XLB), our broad based proxy for AVD.





SNAPSHOT SUMMARY
S&P 500 IV30     11.15%
Nasdaq 100 IV30     12.44%
XLB IV30     14.4%

AVD HV 30     40.42%
AVD Current IV30     65.01%
52 Week Low IV30     31.68%
52 Week High IV30     71.69%

This is a highly unusual situation for American Vanguard Corporation (NYSE:AVD) , where a company in the normally low risk Chemicals sector shows an elevated level of risk.

The implied price swing risk as reflected by the option market has hit an amplified level relative to the company's past. The option market reflects a 95% confidence interval stock price range of ($14.30, $19.30) within the next 30 calendar days.

AVD OPTION MARKET IMPLIED PRICE SWING RISK
The IV30® is the implied price swing risk reflected by the option market in the stock price for the next 30 calendar days -- it's forward looking. American Vanguard Corporation shows an IV30 of 65.0%, which is an amplified level for the company relative to its past.

The option market for AVD has shown an IV30 annual low of 31.7% and an annual high of 71.7%, meaning that AVD is at the 83% percentile right now. Here's a table of the data before we dig into the implied price swing risk rating further.

AVD
Current IV30    
AVD
Low IV30    
AVD
High IV30   
65.0% 31.7% 71.7%

The implied stock swing risk from the option market is a substanially wider range in the next 30 calendar days for American Vanguard Corporation (NYSE:AVD) than it has on average.
Further, if we look backwards, the stock has a realized 30-day historical volatility, called the HV30, of 40.42%.




We have a situation now where not only is the IV30 substantially elevated relative to the past, but the option market reflects the likelihood of yet more stock movement in the next 30-days than it has in the last 30-days. Let's turn to a chart to see what's going on.
 
Note how much higher the forward looking stock swing price risk for American Vanguard Corporation is priced (65.0%) compared to what happened just in the last 30-days (40.4%).

American Vanguard Corporation Risk Rating
The AVD risk rating is at 3.5, where the rating goes from one (the lowest risk) to five (the highest risk). The driving factors for the 3.5 rating are:

The IV30 is above the 80th percentile.
The IV30 is above 60%.
The HV30 is below the annual average.
The IV30 is above the HV30.
The stock has moved just +3.1% over the last 3-months which does indicate some depressed risk.