Apple Inc (NASDAQ:AAPL) Risk Hits An Extraordinary HighDate Published: 2018-01-23
Risk Alert: Before we dive into any analysis we simply note that Apple Inc (NASDAQ:AAPL) 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 25.6% versus the IV30 of the S&P 500 at 9.69%.
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 implied 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 Apple Inc, you can go here: Getting 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 Apple Inc (NASDAQ:AAPL) . The creator of this model is Capital Market Laboratories (CMLviz.com).
In the "Why This Matters" section at the end of this article on Apple 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 AAPL 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 AAPL.
|S&P 500 IV30||9.69%|
|Nasdaq 100 IV30||14.54%|
|AAPL HV 30||14.92%|
|AAPL Current IV30||25.6%|
|52 Week Low IV30||12.66%|
|52 Week High IV30||28.59%|
The risk as reflected by the option market has hit an extraordinary high relative to the company's past. The option market reflects a 95% confidence interval stock price range of ($168.10, $189.00) within the next 30 calendar days.
AAPL 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. Apple Inc shows an IV30 of 25.6%, which is an extraordinary high for the company relative to its past.
The option market for AAPL has shown an IV30 annual low of 12.7% and an annual high of 28.6%, meaning that AAPL is at the 81% 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 a substanially wider range in the next 30 calendar days for Apple Inc (NASDAQ:AAPL) than it has on average.
We have a situation now where not only is the IV30 substantially elevated relative to the past, but the option market reflects the likelihood of yet 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.
Apple Inc Risk Rating
The AAPL 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 above the 80th percentile.
↪ The IV30 is below 30%.
↪ The HV30 is below the annual average.
↪ The HV30 is below 30%.
↪ The IV30 is above the HV30.
↪ The stock has moved +14.3% over the last 3-months which does indicate some elevated risk.