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Option Market Alert: Strayer Education Inc Implied Price Swing Hits An Amplified Level




Strayer Education Inc (NASDAQ:STRA) Risk Hits An Amplified Level

Date Published:

No Risk Alert Here: Before we dive into any analysis we simply note that Strayer Education Inc (NASDAQ:STRA) 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 53.31% verus the IV30 of the S&P 500 at 11.15%. You might say that the post it note for Strayer Education Inc would read, "holding pattern." The annual high for Strayer Education Inc IV30 is 63.52%.



To skip ahead and see if buying or selling options has been a winner in Strayer Education Inc, 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 Strayer Education Inc (NASDAQ:STRA) . 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 Strayer Education 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 STRA and the company's risk rating:

We also take a peek at the implied vol for the Consumer Discretionary ETF (XLY), our broad based proxy for STRA.





SNAPSHOT SUMMARY
S&P 500 IV30     11.15%
Nasdaq 100 IV30     12.44%
XLY IV30     12.1%

STRA HV 30     30.63%
STRA Current IV30     53.31%
52 Week Low IV30     24.71%
52 Week High IV30     63.52%


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 ($69.80, $89.20) within the next 30 calendar days.

STRA 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. Strayer Education Inc shows an IV30 of 53.3%, which is an amplified level for the company relative to its past.

The option market for STRA has shown an IV30 annual low of 24.7% and an annual high of 63.5%, meaning that STRA is at the 74% percentile right now. Here's a table of the data before we dig into the implied price swing risk rating further.

STRA
Current IV30    
STRA
Low IV30    
STRA
High IV30   
53.3% 24.7% 63.5%

The implied stock swing risk from the option market reflects a wider range in the next 30 calendar days for Strayer Education Inc (NASDAQ:STRA) than it has on on average.
Further, if we look backwards, the stock has a realized 30-day historical volatility, called the HV30, of 30.63%.




We have a situation now where not only is the IV30 elevated relative to the past, but the option market reflects the likelihood of yet 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 much higher the forward looking stock swing price risk for Strayer Education Inc is priced (53.3%) compared to what happened just in the last 30-days (30.6%).

Strayer Education Inc Risk Rating
The STRA 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 above the annual average.
The IV30 is above 50%.
The HV30 is below the annual average.
The IV30 is above the HV30.
The stock has moved just -1.3% over the last 3-months which does indicate some depressed risk.