Stock Alert – But Not What You Might Think
Before we cover the full analysis we make a quick alert here that Symantec Corporation (NASDAQ:SYMC) has seen its stock price move at a substantially lowered level. We’ll go through the details below — but that’s the lede — the stock has been unusally quiet. If there was a post it note to summarize the stock movement in the last 30-days it would likely read “quiet time… too quiet?” The HV20 is 26.38% verus the HV20 of the S&P 500 at 3.29%.
Another bit to this alert of quiet time, which we cover in the article, is that while the historical volatility may be a substantially lowered level, the real question that needs to be answered for option traders is not if the HV20 is 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 Symantec Corporation, 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 Symantec Corporation (NASDAQ:SYMC) . 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 Symantec Corporation (NASDAQ:SYMC) , 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 SYMC. Here are the exact steps that led us to this rating, and whether it’s a risk alert or a holding pattern.
Stock volatility using proprietary measures has hit a substantially lowered level.
Even though Symantec Corporation generates substantial revenue, its a small cap technology company which means SYMC is susceptible to excessive risk.
We also note that SYMC has negative GAAP earnings in the last year which makes it ever more susceptible to stock volatility. Here is a rolling annual volatility chart of the biotech index (IBB) versus the Nasdaq 100 and the S&P 500. Note how elevated the technology sector volatility is (the yellow curve) relative to the S&P 500.
While stocks with SYMC’s profile see a short-term quiet period, this is also one of those times
when a shake out volatility move could be on the horizon.
Let’s take a deep dive into some institutional level volatility measures for Symantec Corporation (NASDAQ:SYMC) .
Symantec Corporation Stock Performance
SYMC is up +4.7% over the last three months and up +6.4% over the last six months. The stock price is up +35.6% over the last year. The current stock price is $32.66.
SYMC 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 +4.7% is too small to impact the stock volatility rating for SYMC.
↪ The small difference between the 3-month and 6-month stock returns does not impact the stock volatility rating for SYMC.
SYMC Step 2: Daily Stock 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 Symantec Corporation (NASDAQ:SYMC) and how the day-by-day stock historical volatilities have impacted the rating:
↪ The HV20 of 21.5% is low enough that it has a downward impact on SYMC’s volatility rating.
SYMC Step 3: Symantec Corporation HV20 Compared to Indices
* The HV20 for SYMC is substantially larger than that for both the S&P 500 and the NASDAQ 100 which raises the volatility rating.
* The HV20 for SYMC is substantially larger than that for the Technology ETF (XLK) which raises the volatility rating.
Here is summary data in tabular and chart format.
| S&P 500
| NASDAQ 100
SYMC 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 SYMC is 35.1%,
which is not enough to impact the stock volatility rating.
Here is summary data in tabular and chart format.
Final Stock Volatility Percentile Level: SYMC
The final evolution of the volatility rating for Symantec Corporation 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 Symantec Corporation is 63%, which means the stock has seen elevated volatile price movement relative to its own past and
that has a small impact on the stock volatility rating.
Symantec Corporation Realized Volatility Percentiles