Option Market Alert Axt Inc Implied Price Swing Hits An Inflection Point

Option Market Alert: AXT Inc Implied Price Swing Hits An Inflection Point

AXT Inc (NASDAQ:AXTI) Risk Hits An Inflection Point

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No Risk Alert Here: Before we dive into any analysis we simply note that AXT Inc (NASDAQ:AXTI) 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 57.21% verus the IV30 of the S&P 500 at 11.15%. You might say that the post it note for AXT Inc would read, "holding pattern." The annual high for AXT Inc IV30 is 80.07%.

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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 AXT Inc (NASDAQ:AXTI) . The creator of this model is Capital Market Laboratories (CMLviz.com).

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In the "Why This Matters" section at the end of this article on AXT Inc 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 AXTI and the company's risk rating:

We also take a peek at the implied vol for the Technology ETF (XLK), our broad based proxy for AXTI.

S&P 500 IV30     11.15%
Nasdaq 100 IV30     12.44%
XLK IV30     12.46%

AXTI HV 30     85.23%
AXTI Current IV30     57.21%
52 Week Low IV30     42.38%
52 Week High IV30     80.07%

The implied price swing risk as reflected by the option market has hit an inflection point relative to the company's past. The option market reflects a 95% confidence interval stock price range of ($5.50, $7.10) within the next 30 calendar days.

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. AXT Inc shows an IV30 of 57.2%, which is an inflection point for the company relative to its past.

The option market for AXTI has shown an IV30 annual low of 42.4% and an annual high of 80.1%, meaning that AXTI is at the 39% percentile right now. Here's a table of the data before we dig into the implied price swing risk rating further.

Current IV30    
Low IV30    
High IV30   
57.2% 42.4% 80.1%

The implied stock swing risk from the option market has created a range which is tighter in the next 30 calendar days for AXT Inc (NASDAQ:AXTI) than it has been on average for the last year on average.
Further, if we look backwards, the stock has a realized 30-day historical volatility, called the HV30, of 85.23%.

We have a situation now where the IV30 is depressed relative to the past and at the same time the option market reflects the likelihood of a smaller stock movement in the next 30-days than the stock has realized in the last 30-days. Let's turn to a chart to see what's going on.
Note how much lower the forward looking stock swing price risk for AXT Inc is priced (57.2%) compared to what happened just in the last 30-days (85.2%).

AXT Inc Risk Rating
The AXTI risk rating is at 3, where the rating goes from one (the lowest risk) to five (the highest risk). The driving factors for the 3 rating are:

The IV30 is below the annual average.
The IV30 is above 50%.
The HV30 is above the annual average.
The HV30 is above 85%.
The IV30 is below the HV30.