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Stock Volatility Risk Alert: Cadiz Inc Price Volatility Hits A Towering High




Cadiz Inc (NASDAQ:CDZI) Price Volatility Hits A Towering High

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Stock Risk Alert
Before we dive into any analysis we simply note that Cadiz Inc (NASDAQ:CDZI) has seen its stock price whip around at a rare high level. We'll detail it below -- but that's the lede -- the stock has been moving and the market's reaction is like a yellow post it note on the face of the ticker that reads "risk alert" with an HV20 of 117.99% verus the HV20 of the S&P 500 at 5.58%.



Another bit to this risk alert, which we cover in the article, is that while the historical volatility may be a rare high level (the stock has been whipping around), the real question that needs to be answered for option traders is not if the HV20 is high, 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 Cadiz 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 Cadiz Inc (NASDAQ:CDZI) . 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 four 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 Cadiz Inc (NASDAQ:CDZI) , 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 CDZI. Here are the exact steps that led us to this rating, and whether it's a risk alert or a holding pattern.

CDZI Recent Price Volatility


Rating
Price volatility using proprietary measures has hit a rare high level. Let's take a deep dive into some institutional level volatility measures for Cadiz Inc (NASDAQ:CDZI) .

Cadiz Inc Stock Performance
CDZI is down -7.4% over the last three months and down -12.2% over the last six months. The stock price is up +85.0% over the last year. The current stock price is $12.6.

CDZI 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 -7.4% is too small to impact the price volatility rating for CDZI.
  The small difference between the 3-month and 6-month stock returns does not impact the price volatility rating for CDZI.

CDZI 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 Cadiz Inc (NASDAQ:CDZI) and how the day-by-day price historical volatilities have impacted the rating:

  The HV20 of 143.5% is very high and has a substantial impact on CDZI's volatility rating.


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

* The HV20 for CDZI is substantially larger than that for the Consumer Staples ETF (XLP) which raises the volatility rating.

Here is summary data in tabular and chart format.

           CDZI
           HV20    
   S&P 500
HV20
   NASDAQ 100
HV20   
   XLP
HV20   
           143.5%    5.58%    9.57%    6.85%

CDZI Step 4: Daily Volatility Percentiles and Highs

We also examine the annual high of the HV30 in our rating.
  The 52 week high in HV30 for CDZI is 118.3%, which is very high and has a large upward impact on the price volatility rating.

Here is summary data in tabular and chart format.

           CDZI
           HV20    
   CDZI
HV30
   CDZI
HV30 High   
           143.5%    118.0%    118.3%

Final Price Volatility Percentile Level: CDZI
The final evolution of the volatility rating for Cadiz 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 Cadiz Inc is 100%, which means the stock has seen extremely volatile price movement relative to its own past and that has a large impact on the price volatility rating.

Cadiz Inc Realized Volatility Percentiles