Stock Alert and Holding Pattern: Summit Materials Inc Price Volatility Hits An Amplified Level

Summit Materials Inc (NYSE:SUM) Price Volatility Hits An Amplified Level

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Stock Alert and Holding Pattern
Before we cover the full analysis we make a quick alert here that Summit Materials Inc (NYSE:SUM) has seen its stock price move at an elevated level. We'll go through the details below -- but that's the lede -- the stock has been behaving, roughly speaking, 'normally.' If there was a post it note to summarize the stock movement in the last 30-days it would likely read "holding pattern." The HV20 is 29.5% verus the HV20 of the S&P 500 at 5.69%.

But don't confuse a holding pattern with low risk -- this is quite possibly an inflection point.

Another bit to this holding pattern, which we cover in the article, is that while the historical volatility may be an elevated level, the real question that needs to be answered for option traders is not if the HV20 is high or 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 Summit Materials Inc, you can go here: Getting serious about option trading.

This is a proprietary realized volatility rating created by Capital Market Laboratories (CMLviz) based on a large number of data interactions for Summit Materials Inc (NYSE:SUM) . 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 Summit Materials Inc (NYSE:SUM) , 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 SUM. Here are the exact steps that led us to this rating, and whether it's a risk alert or a holding pattern.

SUM Recent Price Volatility

Price volatility using proprietary measures has hit an elevated level. Let's take a deep dive into some institutional level volatility measures for Summit Materials Inc (NYSE:SUM) .

Summit Materials Inc Stock Performance
SUM is up +10.2% over the last three months and up +36.2% over the last six months. The stock price is up +65.9% over the last year. The current stock price is $31.48.

SUM 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 +10.2% has a small impact on the price volatility rating for SUM.
  The noteworthy difference between the 3-month and 6-month stock returns has a meaningful impact on the price volatility rating for SUM.

SUM 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 Summit Materials Inc (NYSE:SUM) and how the day-by-day price historical volatilities have impacted the rating:

  The HV20 of 27.6% is low enough that it has a downward impact on SUM's volatility rating.

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

* The HV20 for SUM is substantially larger than that for the Materials ETF (XLB) which raises the volatility rating.

Here is summary data in tabular and chart format.

   S&P 500
   NASDAQ 100
           27.6%    5.69%    10.35%    8.6%

SUM 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 SUM is 44.9%, which is not enough to impact the price volatility rating.

Here is summary data in tabular and chart format.

HV30 High   
           27.6%    29.5%    44.9%

Final Price Volatility Percentile Level: SUM
The final evolution of the volatility rating for Summit Materials 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.

Summit Materials Inc Realized Volatility Percentiles