Option Market Alert: magicJack VocalTec Ltd. Implied Price Swing Hits An Elevated Level

magicJack VocalTec Ltd. (NASDAQ:CALL) Risk Hits An Elevated Level

Date Published:

Risk Alert: Before we dive into any analysis we simply note that magicJack VocalTec Ltd. (NASDAQ:CALL) 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 61.07% verus the IV30 of the S&P 500 at 7.55%. The annual high for magicJack VocalTec Ltd. IV30 is 69.99%.

To skip ahead of this risk alert and see if buying or selling options has been a winner in magicJack VocalTec Ltd., you can go here: Geting 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 magicJack VocalTec Ltd. (NASDAQ:CALL) . The creator of this model is Capital Market Laboratories (CMLviz.com).

In the "Why This Matters" section at the end of this article on magicJack VocalTec Ltd. 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 CALL 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 CALL.

S&P 500 IV30     7.55%
Nasdaq 100 IV30     9.51%
XLK IV30     9.81%

CALL HV 30     18.06%
CALL Current IV30     61.07%
52 Week Low IV30     41.98%
52 Week High IV30     69.99%

The implied price swing risk as reflected by the option market has hit an elevated level relative to the company's past. The option market reflects a 95% confidence interval stock price range of ($7.20, $9.50) within the next 30 calendar days.

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. magicJack VocalTec Ltd. shows an IV30 of 61.1%, which is an elevated level for the company relative to its past.

The option market for CALL has shown an IV30 annual low of 42.0% and an annual high of 70.0%, meaning that CALL is at the 68% percentile right now. Here's a table of the data before we dig into the implied price swing risk rating further.

Current IV30    
Low IV30    
High IV30   
61.1% 42.0% 70.0%

The implied stock swing risk from the option market reflects a wider range in the next 30 calendar days for magicJack VocalTec Ltd. (NASDAQ:CALL) than it has on on average.
Further, if we look backwards, the stock has a realized 30-day historical volatility, called the HV30, of 18.06%.

We have a situation now where not only is the IV30 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.
Note how much higher the forward looking stock swing price risk for magicJack VocalTec Ltd. is priced (61.1%) compared to what happened just in the last 30-days (18.1%).

magicJack VocalTec Ltd. Risk Rating
The CALL risk rating is at 4, where the rating goes from one (the lowest risk) to five (the highest risk). The driving factors for the 4 rating are:

The IV30 is above the annual average.
The IV30 is above 60%.
The HV30 is below the 20th percentile.
The HV30 is below 30%.
The IV30 is above the HV30.
The stock has moved +14.4% over the last 3-months which does indicate some elevated risk.