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Option Market Alert: Capital Senior Living Corporation Implied Price Swing Hits An Inflection Point




Capital Senior Living Corporation (NYSE:CSU) Risk Hits An Inflection Point

Date Published:

No Risk Alert Here: Before we dive into any analysis we simply note that Capital Senior Living Corporation (NYSE:CSU) 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 36.6% verus the IV30 of the S&P 500 at 11.15%. You might say that the post it note for Capital Senior Living Corporation would read, "holding pattern." The annual high for Capital Senior Living Corporation IV30 is 50.66%.



To skip ahead and see if buying or selling options has been a winner in Capital Senior Living 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 Capital Senior Living Corporation (NYSE:CSU) . The creator of this model is Capital Market Laboratories (CMLviz.com).


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 Capital Senior Living 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 CSU and the company's risk rating:

We also take a peek at the implied vol for the Health Care ETF (XLV), our broad based proxy for CSU.





SNAPSHOT SUMMARY
S&P 500 IV30     11.15%
Nasdaq 100 IV30     12.44%
XLV IV30     11.89%

CSU HV 30     21.34%
CSU Current IV30     36.6%
52 Week Low IV30     26.8%
52 Week High IV30     50.66%


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 ($13.00, $15.30) within the next 30 calendar days.

CSU 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. Capital Senior Living Corporation shows an IV30 of 36.6%, which is an inflection point for the company relative to its past.

The option market for CSU has shown an IV30 annual low of 26.8% and an annual high of 50.7%, meaning that CSU is at the 41% percentile right now. Here's a table of the data before we dig into the implied price swing risk rating further.

CSU
Current IV30    
CSU
Low IV30    
CSU
High IV30   
36.6% 26.8% 50.7%

The implied stock swing risk from the option market has created a range which is tighter in the next 30 calendar days for Capital Senior Living Corporation (NYSE:CSU) 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 21.34%.




We have an unusual situation now where the IV30 is depressed relative to the past, but even with that risk pricing, the option market reflects the likelihood of a greater 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 higher the forward looking stock swing price risk for Capital Senior Living Corporation is priced (36.6%) compared to what happened just in the last 30-days (21.3%).

Capital Senior Living Corporation Risk Rating
The CSU 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 HV30 is below the 20th percentile.
The HV30 is below 30%.
The IV30 is above the HV30.
The stock has moved -16.5% over the last 3-months which does indicate some elevated risk.