Fitbit Inc (NYSE:FIT) Risk Hits A Notable HighDate Published: 2017-04-21
Risk Alert: Before we dive into any analysis we simply note that Fitbit Inc (NYSE:FIT) 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 65.86% verus the IV30 of the S&P 500 at 11.15%. The annual high for Fitbit Inc IV30 is 90.64%.
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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 Fitbit Inc (NYSE:FIT) . 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 Fitbit 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 FIT 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 FIT.
|S&P 500 IV30||11.15%|
|Nasdaq 100 IV30||12.44%|
|FIT HV 30||46.04%|
|FIT Current IV30||65.86%|
|52 Week Low IV30||42.34%|
|52 Week High IV30||90.64%|
The implied price swing risk as reflected by the option market has hit a notable high relative to the company's past. The option market reflects a 95% confidence interval stock price range of ($4.80, $6.60) within the next 30 calendar days.
FIT 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. Fitbit Inc shows an IV30 of 65.9%, which is a notable high for the company relative to its past.
The option market for FIT has shown an IV30 annual low of 42.3% and an annual high of 90.6%, meaning that FIT is at the 49% percentile right now. Here's a table of the data before we dig into the implied price swing risk rating further.
The implied stock swing risk from the option market has created a range which is tighter in the next 30 calendar days for Fitbit Inc (NYSE:FIT) than it has been on average for the last year on average. But, even though the IV30 percentile is below 50, other critical volatility measures that we discuss below point to elevated swing price risk.
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.
Fitbit Inc Risk Rating
The FIT 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 below the annual average.
↪ The IV30 is above 60%.
↪ The HV30 is below the 20th percentile.
↪ The IV30 is above the HV30.
↪ The stock has moved -20.1% over the last 3-months which does indicate some elevated risk.