Alphabet Inc (NASDAQ:GOOGL) Risk Hits An Escalated LevelDate Published: 2018-04-1
Risk Alert: Before we dive into any analysis we simply note that Alphabet Inc (NASDAQ:GOOGL) 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 35.17% versus the IV30 of the S&P 500 at 17.27%. The annual high for Alphabet Inc IV30 is 39.07%.
To skip ahead of this risk alert and see if buying or selling options has been a winner in Alphabet 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 Alphabet Inc (NASDAQ:GOOGL) . The creator of this model is Capital Market Laboratories (CMLviz.com).
In the "Why This Matters" section at the end of this article on Alphabet 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 GOOGL 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 GOOGL.
|S&P 500 IV30||17.27%|
|Nasdaq 100 IV30||25.15%|
|GOOGL HV 30||31.53%|
|GOOGL Current IV30||35.17%|
|52 Week Low IV30||12.54%|
|52 Week High IV30||39.07%|
The implied price swing risk as reflected by the option market has hit an escalated level relative to the company's past. The option market reflects a 95% confidence interval stock price range of ($953.80, $1,120.50) within the next 30 calendar days.
GOOGL 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. Alphabet Inc shows an IV30 of 35.2%, which is an escalated level for the company relative to its past.
The option market for GOOGL has shown an IV30 annual low of 12.5% and an annual high of 39.1%, meaning that GOOGL is at the 85% percentile right now. Here's a table of the data before we dig into the implied price swing risk rating further.
The implied stock swing risk from the option market is a substanially wider range in the next 30 calendar days for Alphabet Inc (NASDAQ:GOOGL) 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.
Alphabet Inc Risk Rating
The GOOGL 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 above the 80th percentile.
↪ The HV30 is above the 80th percentile.
↪ The IV30 is above the HV30.
↪ The stock has moved just -1.5% over the last 3-months which does indicate some depressed risk.