Option Market Alert: Broadwind Energy Inc Implied Price Swing Hits An Escalated Level

Broadwind Energy Inc (NASDAQ:BWEN) Risk Hits An Escalated Level

Date Published:

Risk Alert: Before we dive into any analysis we simply note that Broadwind Energy Inc (NASDAQ:BWEN) risk is elevated. We'll detail it below -- but that's the lede -- the option market is starting to flash those neon lights that signal "risk is rising" with an IV30 of 69.79% verus the IV30 of the S&P 500 at 11.15%. The annual high for Broadwind Energy Inc IV30 is 87.32%.

To skip ahead of this risk alert and see if buying or selling options has been a winner in Broadwind Energy Inc, you can go here: Geting serious about option trading.

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 Broadwind Energy Inc (NASDAQ:BWEN) . The creator of this model is Capital Market Laboratories (

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In the "Why This Matters" section at the end of this article on Broadwind Energy 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 BWEN 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 BWEN.

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

BWEN HV 30     80.08%
BWEN Current IV30     69.79%
52 Week Low IV30     45.62%
52 Week High IV30     87.32%

The implied price swing risk as reflected by the option market has hit an escalated level relative to the company's past. The option market reflects a 95% confidence interval stock price range of ($7.20, $9.90) 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. Broadwind Energy Inc shows an IV30 of 69.8%, which is an escalated level for the company relative to its past.

The option market for BWEN has shown an IV30 annual low of 45.6% and an annual high of 87.3%, meaning that BWEN is at the 58% 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   
69.8% 45.6% 87.3%

The implied stock swing risk from the option market reflects a wider range in the next 30 calendar days for Broadwind Energy Inc (NASDAQ:BWEN) than it has on on average.
Further, if we look backwards, the stock has a realized 30-day historical volatility, called the HV30, of 80.08%.

We have a situation now where not only is the IV30 elevated relative to the past, but even with that risk pricing, the option market reflects the likelihood of less 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 lower the forward looking stock swing price risk for Broadwind Energy Inc is priced (69.8%) compared to what happened just in the last 30-days (80.1%).

Broadwind Energy Inc Risk Rating
The BWEN risk rating is at 4, where the rating goes from one (the lowest risk) to five (the highest risk). The driving factors for the 4 rating are:

The IV30 is above the annual average.
The IV30 is above 60%.
The HV30 is above the 80th percentile.
The HV30 is above 70%.
The IV30 is below the HV30.
The stock has moved +108.5% over the last 3-months which does indicate some elevated risk.