Globalstar Inc (AMEX:GSAT) Risk Hits An Extreme HighDate Published: 2017-04-21
Risk Alert: Before we dive into any analysis we simply note that Globalstar Inc (AMEX:GSAT) risk is at an extremely elevated level. We'll detail it below -- but that's the lede -- the option market is flashing a neon sign that reads "risk is here" with an IV30 of 103.4% verus the IV30 of the S&P 500 at 11.15%.
One thing to note, which we cover in the article, is that while implied volatility may be high, the real question that needs to be answered for option traders is not if the impled vol is high, but rather if the realized volatility that is coming in the next 30 days will be higher or lower than the option market is pricing.
To skip ahead of this risk alert and see if buying or selling options has been a winner in Globalstar 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 Globalstar Inc (AMEX:GSAT) . 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 Globalstar 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 GSAT 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 GSAT.
|S&P 500 IV30||11.15%|
|Nasdaq 100 IV30||12.44%|
|GSAT HV 30||43.55%|
|GSAT Current IV30||103.4%|
|52 Week Low IV30||74.56%|
|52 Week High IV30||386.14%|
The risk as reflected by the option market has hit an extreme high relative to the company's past. The option market reflects a 95% confidence interval stock price range of ($1.40, $2.20) within the next 30 calendar days.
GSAT OPTION MARKET RISK
The IV30® is the risk reflected by the option market in the stock price for the next 30 calendar days -- it's forward looking. Globalstar Inc shows an IV30 of 103.4%, which is an extreme high for the company relative to its past.
The option market for GSAT has shown an IV30 annual low of 74.6% and an annual high of 386.1%, meaning that GSAT is at the 9% percentile right now. Here's a table of the data before we dig into the risk rating further.
The implied stock swing risk from the option market is extremeley tight in the next 30 calendar days for Globalstar Inc (AMEX:GSAT) relative to the average in the last year. But, even though the IV30 percentile is below 50, other critical volatility measures that we discuss below point to extreme stock swing price risk.
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.
Globalstar Inc Risk Rating
The GSAT risk rating is at 5, where the rating goes from one (the lowest risk) to five (the highest risk). The driving factors for the 5 rating are:
↪ The IV30 is below the 20th percentile.
↪ The IV30 is above 100%, which is extremely elevated.
↪ The HV30 is below the 20th percentile.
↪ The IV30 is above the HV30.
↪ The stock has moved +31.9% over the last 3-months which does indicate some elevated risk.