Option Market Alert: Kite Pharma Inc Implied Price Swing Hits An Amplified Level

Kite Pharma Inc (NASDAQ:KITE) Risk Hits An Amplified Level

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No Risk Alert Here: Before we dive into any analysis we simply note that Kite Pharma Inc (NASDAQ:KITE) 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 48.36% verus the IV30 of the S&P 500 at 11.15%. You might say that the post it note for Kite Pharma Inc would read, "holding pattern." The annual high for Kite Pharma Inc IV30 is 117.03%.

To skip ahead and see if buying or selling options has been a winner in Kite Pharma 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 Kite Pharma Inc (NASDAQ:KITE) . 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 Kite Pharma 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 KITE 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 KITE.

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

KITE HV 30     47.37%
KITE Current IV30     48.36%
52 Week Low IV30     47.32%
52 Week High IV30     117.03%

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 ($72.20, $90.10) 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. Kite Pharma Inc shows an IV30 of 48.4%, which is an amplified level for the company relative to its past.

The option market for KITE has shown an IV30 annual low of 47.3% and an annual high of 117.0%, meaning that KITE is at the 1% 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   
48.4% 47.3% 117.0%

The implied stock swing risk from the option market is extremeley tight in the next 30 calendar days for Kite Pharma Inc (NASDAQ:KITE) relative to the average in the last year.
Further, if we look backwards, the stock has a realized 30-day historical volatility, called the HV30, of 47.37%.

We have an unusual situation now where the IV30 is extremely depressed relative to the past, but even with that risk pricing, the option market reflects the likelihood of 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 similar the forward risk for Kite Pharma Inc is priced (48.4%) compared to what happened just in the last 30-days (47.4%).

Kite Pharma Inc Risk Rating
The KITE 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 below the 20th percentile.
The IV30 is above 40%.
The HV30 is below the annual average.
The stock has moved +71.8% over the last 3-months which does indicate some elevated risk.