Option Market Alert: Pacific Biosciences of California Inc Implied Price Swing Hits An Elevated Level
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Option Market Alert: Pacific Biosciences of California Inc Implied Price Swing Hits An Elevated Level




Pacific Biosciences of California Inc (NASDAQ:PACB) Risk Hits An Elevated Level

Date Published:

Risk Alert: Before we dive into any analysis we simply note that Pacific Biosciences of California Inc (NASDAQ:PACB) risk is elevated. We'll detail it below -- but that's the lede -- the option market is starting to flash those neon lights that signal "risk is rising" with an IV30 of 95.91% versus the IV30 of the S&P 500 at 12.47%. The annual high for Pacific Biosciences of California Inc IV30 is 147.52%.



To skip ahead of this risk alert and see if buying or selling options has been a winner in Pacific Biosciences of California Inc, you can go here: Getting serious about option trading.

PREFACE
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 Pacific Biosciences of California Inc (NASDAQ:PACB) . The creator of this model is Capital Market Laboratories (CMLviz.com).


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

In the "Why This Matters" section at the end of this article on Pacific Biosciences of California 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 PACB and the company's risk rating:

We also take a peek at the implied vol for the Health Care ETF (XLV), our broad based proxy for PACB.





SNAPSHOT SUMMARY
S&P 500 IV30     12.47%
Nasdaq 100 IV30     15.97%
XLV IV30     14.1%

PACB HV 30     56.65%
PACB Current IV30     95.91%
52 Week Low IV30     52.58%
52 Week High IV30     147.52%


The implied price swing risk as reflected by the option market has hit an elevated level relative to the company's past. The option market reflects a 95% confidence interval stock price range of ($2.20, $3.40) within the next 30 calendar days.

PACB OPTION MARKET IMPLIED PRICE SWING RISK
The IV30® is the implied price swing risk reflected by the option market in the stock price for the next 30 calendar days -- it's forward looking. Pacific Biosciences of California Inc shows an IV30 of 95.9%, which is an elevated level for the company relative to its past.

The option market for PACB has shown an IV30 annual low of 52.6% and an annual high of 147.5%, meaning that PACB is at the 46% percentile right now. Here's a table of the data before we dig into the implied price swing risk rating further.

PACB
Current IV30    
PACB
Low IV30    
PACB
High IV30   
95.9% 52.6% 147.5%

The implied stock swing risk from the option market has created a range which is tighter in the next 30 calendar days for Pacific Biosciences of California Inc (NASDAQ:PACB) than it has been on average for the last year on average. But, even though the IV30 percentile is below 50, other critical volatility measures that we discuss below point to substantially elevated swing price risk.
Further, if we look backwards, the stock has a realized 30-day historical volatility, called the HV30, of 56.65%.




We have an unusual situation now where the IV30 is depressed relative to the past, but even with that risk pricing, the option market reflects the likelihood of a greater stock movement in the next 30-days than the stock has realized in the last 30-days. Let's turn to a chart to see what's going on.
 
Note how much higher the forward looking stock swing price risk for Pacific Biosciences of California Inc is priced (95.9%) compared to what happened just in the last 30-days (56.7%).

Pacific Biosciences of California Inc Risk Rating
The PACB risk rating is at 4.5, where the rating goes from one (the lowest risk) to five (the highest risk). The driving factors for the 4.5 rating are:

The IV30 is below the annual average.
The IV30 is above 90%, which is very elevated.
The HV30 is below the annual average.
The IV30 is above the HV30.
The stock has moved just +2.2% over the last 3-months which does indicate some depressed risk.