Ulta Beauty Inc (NASDAQ:ULTA) Risk Points versus Consumer Staples (XLP)Date Published: 2017-04-21
This is a scatter plot analysis of the critical risk points from the option market for Ulta Beauty Inc (NASDAQ:ULTA) compared to its own past and the Consumer Staples ETF. In order to examine the forward looking risk for Ulta Beauty Inc (NASDAQ:ULTA) the next 30-days, we must look to the option market.
Now, before we dive into the analysis on ULTA, we make one critical note since we're talking about options:
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In the "Why This Matters" section at the end of this article on Ulta Beauty Inc (NASDAQ:ULTA) , 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.
But that's at the end, now let's jump back into the risk point charting and number crunching for Ulta Beauty Inc (NASDAQ:ULTA) . We start by noting that ULTA is in the retailing sector which means along with some other industries we also compare the company to the closest match we could find, which was the Consumer Staples ETF (XLP) as a proxy for Ulta Beauty Inc.
We have highlighted the IV30® for XLP and for ULTA in the table below.
|CONTEXT: THE INDICES|
|S&P 500 (SPY)||IV30||11.15%|
|Nasdaq 100 (QQQ)||IV30||12.44%|
|Consumer Staples ETF (XLP)||IV30||10.98%|
|Ulta Beauty Inc (NASDAQ:ULTA)|
|ULTA 52 Week Low||IV30||15.72%|
|ULTA 52 Week High||IV30||44.5%|
|Ulta Beauty Inc Implied Risk Scatter Plot|
|(a new risk chart, built for option traders)|
Scatter Plot Risk Legend
The blue point is the current 30-day implied volatility for Ulta Beauty Inc.
The black point is the current 30-day implied volatility for the Consumer Staples ETF (XLP).
The red point is the 52 week low in IV30® for Ulta Beauty Inc.
The green point is the 52 week high in IV30® for Ulta Beauty Inc.
The various other scatter plot points in the middle give us risk context outside of the retailing sector.
The IV30® is the risk reflected by the option market in the stock price for the next 30 calendar days.
* We can see that the risk as reflected by the option market for the next 30-days for Ulta Beauty Inc is above all the indices we have charted including the Consumer Staples ETF (XLP).
* We can further see that the current IV30 for Ulta Beauty Inc of 19.94% is closer to the annual low of 15.72% than the annual high of 44.5%. Simply stated, this means that the option market is pricing less risk than the average over the past year.
* For some context, we note that the annual range in IV30® for the Consumer Staples ETF is between [8.36%, 17.91%] while Ulta Beauty Inc has had a range of [15.72%, 44.5%].
Get this same analysis on any ticker here:
A New Kind of Risk Point Chart
This is chart was developed for the trader. It allows us to easily see where the forward looking risk for Ulta Beauty Inc (NASDAQ:ULTA) lies relative to the last year, and the various major stock groupings and the Retailing sector without using time series data, which can confuse the information.
While the option market risk rating is on the low side, we note that companies in this situation are still susceptible to sudden stock move risk, it's simply the probability of that large stock move is depressed. Buyers of options and volatility may find these prices more attractive than at other times.