Fred’s Inc (NASDAQ:FRED) Risk Points versus Consumer Staples (XLP)
This is a scatter plot analysis of the critical risk points from the option market for Fred’s Inc (NASDAQ:FRED)
compared to its own past and the Consumer Staples ETF. In order to examine the forward looking risk for Fred’s Inc (NASDAQ:FRED) the next 30-days, we must look to the option market.
Now, before we dive into the analysis on FRED, we make one critical note since we’re talking about options:
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In the “Why This Matters” section at the end of this article on Fred’s Inc (NASDAQ:FRED) , 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.
But that’s at the end, now let’s jump back into the risk point charting and number crunching for Fred’s Inc (NASDAQ:FRED) . We start by noting that FRED is in the retailing sector which means along with some other industries we also compare the company to the closest match we could find, which was
the Consumer Staples ETF (XLP) as a proxy for Fred’s Inc.
We have highlighted the IV30® for XLP and for FRED in the table below.
|CONTEXT: THE INDICES|
|S&P 500 (SPY)||IV30||7.86%|
|Nasdaq 100 (QQQ)||IV30||12.36%|
|Consumer Staples ETF (XLP)||IV30||8.7%|
|Fred’s Inc (NASDAQ:FRED)|
|FRED 52 Week Low||IV30||38.04%|
|FRED 52 Week High||IV30||121.27%|
Fred’s Inc Implied Risk Scatter Plot
(a new risk chart, built for option traders)
Scatter Plot Risk Legend
The blue point is the current 30-day implied volatility for Fred’s Inc.
The black point is the current 30-day implied volatility for the Consumer Staples ETF (XLP).
The red point is the 52 week low in IV30® for Fred’s Inc.
The green point is the 52 week high in IV30® for Fred’s Inc.
The various other scatter plot points in the middle give us risk context outside of the retailing sector.
The IV30® is the risk reflected by the option market in the stock price for the next 30 calendar days.
* We can see that the risk as reflected by the option market for the next 30-days for Fred’s Inc is above all the indices we have
charted including the Consumer Staples ETF (XLP).
* We can further see that the current IV30 for Fred’s Inc of 70.3% is closer to the annual low of 38.04% than the annual high of 121.27%.
Simply stated, this means that the option market is pricing less risk than the average over the past year.
* For some context, we note that the annual range in IV30® for the Consumer Staples ETF is between [7.37%, 15.88%]
while Fred’s Inc has had a range of [38.04%, 121.27%].
Get this same analysis on any ticker here:
A New Kind of Risk Point Chart
This is chart was developed for the trader. It allows us to easily see where the forward looking risk for Fred’s Inc (NASDAQ:FRED) lies relative
to the last year, and the various major stock groupings and the Retailing sector without using time series data, which can confuse the information.