Risk Malaise Alert in Option Market: Equity Commonwealth Implied Price Swing Hits A Collapsing Low – CML News

This post was originally published on this site

Risk Malaise Alert — Not How You Might Think:
Before we dive into any analysis we simply note that Equity Commonwealth (NYSE:EQC) risk is actually priced pretty low by the option market as of right now. We’ll detail it below — but that’s the lede — the option market is reflecting a sort of risk malaise, for now, an IV30 of 18.45% verus the IV30 of the S&P 500 at 8.99%. The annual high for Equity Commonwealth IV30 is 23.45% — and we’re below that level. The alert here is low vol.

One thing to note beyond the risk malaise alert, which we cover in the article, is that while implied volatility may be low, the real question that needs to be answered for option sellers is not if the impled vol is low, but rather if the realized volatility that is coming in the next 30 days will be 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 Equity Commonwealth, you can go here: Geting 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 Equity Commonwealth (NYSE:EQC) . The creator of this model is Capital Market Laboratories (CMLviz.com).