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Stock Alert: ABIOMED Inc Price Volatility Hits A Plunging Low




ABIOMED Inc (NASDAQ:ABMD) Price Volatility Hits A Plunging Low

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Stock Alert - But Not What You Might Think
Before we cover the full analysis we make a quick alert here that ABIOMED Inc (NASDAQ:ABMD) has seen its stock price move at a rock bottom low level. We'll go through the details below -- but that's the lede -- the stock has been unusally quiet. If there was a post it note to summarize the stock movement in the last 30-days it would likely read "quiet time... too quiet?" The HV20 is 16.05% verus the HV20 of the S&P 500 at 6.43%.



Another bit to this alert of quiet time, which we cover in the article, is that while the historical volatility may be a rock bottom low level, the real question that needs to be answered for option traders is not if the HV20 is low, but rather if the implied volatility that is priced for the next 30-days accuratley reflects what we're about to see in the stock for the next month.

To jump forward and examine if owning or shorting options has been a positive trade in ABIOMED Inc, you can go here: Getting serious about option trading.

PREFACE
This is a proprietary realized volatility rating created by Capital Market Laboratories (CMLviz) based on a large number of data interactions for ABIOMED Inc (NASDAQ:ABMD) . We examine the little used gem of daily stock volatility over a 20-day and 30-day trading period, as well as comparisons to the last year and the actual stock returns over the last three- and six-months and the S&P 500 and Nasdaq 100 indices.


Option trading isn't about luck -- this three minute video will change your trading life forever: Option Trading and Truth


As a heads up, in the "Why This Matters" section at the end of this article on ABIOMED Inc (NASDAQ:ABMD) , we're going to take a step back and show really clearly that there is actually a lot less "luck" in successful option trading than most people are aware of. This idea of an "option trading expert" is vastly over complicated so those with the information advantage can continue to profit at the expense of the rest.

But before that, let's turn back to ABMD. Here are the exact steps that led us to this rating, and whether it's a risk alert or a holding pattern.

ABMD Recent Price Volatility


Rating
Price volatility using proprietary measures has hit a rock bottom low level. While stocks with ABMD's profile see a short-term quiet period, this is also one of those times when a shake out volatility move could be on the horizon. To that point, we do note that ABMD is showing unusally low volatility in the last month relative to its past. Let's take a deep dive into some institutional level volatility measures for ABIOMED Inc (NASDAQ:ABMD) .

ABIOMED Inc Stock Performance
ABMD is up +12.0% over the last three months and down -0.0% over the last six months. The stock price is up +23.2% over the last year. The current stock price is $125.21.

ABMD Step 1: Stock Returns
The one-year stock return does not impact the volatility rating since we are looking at a shorter time horizon. However, the rating does examine the 3-month returns and the absolute difference between the 3-month and 6-month returns.

  The 3-month stock return of +12.0% has a small impact on the price volatility rating for ABMD.
  The greater than 10% difference between the 3-month and 6-month stock returns has an impact on the price volatility rating for ABMD.

ABMD Step 2: Daily Price Volatility Level
The HV30® takes the stock's day to day historical volatility over the last 30-days and then annualizes it. The HV20 looks back over just 20-days -- a shorter time period. Here is the breakdown for ABIOMED Inc (NASDAQ:ABMD) and how the day-by-day price historical volatilities have impacted the rating:

  The HV20 of 16.8% is quite low and has a substantial downward impact on ABMD's volatility rating.


ABMD Step 3: ABIOMED Inc HV20 Compared to Indices
* The HV20 for ABMD is substantially larger than that for both the S&P 500 and the NASDAQ 100 which raises the volatility rating.

* The HV20 for ABMD is substantially larger than that for the Health Care ETF (XLV) which raises the volatility rating.

Here is summary data in tabular and chart format.

           ABMD
           HV20    
   S&P 500
HV20
   NASDAQ 100
HV20   
   XLV
HV20   
           16.8%    6.43%    6.07%    5.57%

ABMD Step 4: Daily Volatility Percentiles and Highs

We also examine the annual high of the HV30 in our rating but in this case the 52 week high in HV30 for ABMD is 45.7%, which is not enough to impact the price volatility rating.

Here is summary data in tabular and chart format.

           ABMD
           HV20    
   ABMD
HV30
   ABMD
HV30 High   
           16.8%    16.1%    45.7%

Final Price Volatility Percentile Level: ABMD
The final evolution of the volatility rating for ABIOMED Inc is a comparison of the HV30 value relative to its past, which is neatly summarized in the percentile -- a scoring mechanism that goes from a low of 1 to a high of 100.

  The HV30 percentile for ABIOMED Inc is 13%, which means the stock has seen very low volatility in its price movement relative to its own past and that has a dampening impact on the price volatility rating.

ABIOMED Inc Realized Volatility Percentiles