Platinum Essentials provides ranking tools that can quickly provide stocks with high [expensive] and low [cheap] relative implied volatility [IV] levels that van then be saved into a Platinum Stock List for strategy scans.
Here are the steps for creating a stock list with IV that is cheap over the last month:
Go to the Platinum Essentials Home screen and click, “Volatility Rankings”.
Scan the left side of the screen and select the IV timeframe of interest (here Implied Volatility, Cheap: 1 month & 2 month):
The following was returned on Mon October 29, 2012 (markets closed due to storm) when you select Cheap: 1 mo:
As a last step, you may want to save the stock list so it can be used with one of Platinum’s Find Trades tool.
When using these quick tools for finding potential candidates, keep the following in mind:
- Check the IV chart to assess actual IV conditions
- Check the stock chart to assess reson for low IV
In terms of the stock chart check, a jump in price followed y what seems like a constant price, check the news for a possible merger or acquisition involving the stock. This is one of the most common reasons a stock will come up in a low IV scan, but expectations are for IV to stay low.
Clare White, CMT
Contributing Writer and Options Strategist
Optionetics.com ~ Your Options Education Site
Questions for Clare? Please visit the discussion board on the homepage of Optionetics.com.