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Simpson Manufacturing Company Inc Risk Points versus Materials

12 September 2017 1:08 PM
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Simpson Manufacturing Company Inc Risk Points versus Materials

This is a scatter plot analysis of the critical risk points from the option market for Simpson Manufacturing Company Inc (NYSE:SSD) compared to its own past and the Materials ETF. In order to examine the forward looking risk for Simpson Manufacturing Company Inc (NYSE:SSD) the next 30-days, we must look to the option market.

In the "Why This Matters" section at the end of this article on Simpson Manufacturing Company Inc (NYSE:SSD) , 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 Simpson Manufacturing Company Inc (NYSE:SSD) . We start by noting that SSD is in the building products sector which means along with some other industries we also compare the company to the closest match we could find, which was the Materials ETF (XLB) as a proxy for Simpson Manufacturing Company Inc.

The blue point is the current 30-day implied volatility for Simpson Manufacturing Company Inc.

The black point is the current 30-day implied volatility for the Materials ETF (XLB).

The red point is the 52 week low in IV30® for Simpson Manufacturing Company Inc.

The green point is the 52 week high in IV30® for Simpson Manufacturing Company Inc.

The various other scatter plot points in the middle give us risk context outside of the building products 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 Simpson Manufacturing Company Inc is in between the indices we have charted but is above the Materials ETF (XLB), which we use as a proxy for Simpson Manufacturing Company Inc.

* We can further see that the current IV30 for Simpson Manufacturing Company Inc of 16.91% is closer to the annual low of 8.22% than the annual high of 43.39%. 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 Materials ETF is between [10.65%, 20.89%] while Simpson Manufacturing Company Inc has had a range of [8.22%, 43.39%].

Source: news.cmlviz.com

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