Implied increase in volatility of Aqua Metals stock options (AQMS)
Investors in Aqua Metals, Inc. AQMS should pay close attention to stocks according to the movements of the options market in recent times. That’s because the $ 5.00 call on July 16, 2021 had one of the highest implied volatilities of any stock options today.
What is implied volatility?
Implied volatility shows how much the market expects movement in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks expect a big move one way or the other. It could also mean that there will soon be an event that could cause a big rally or a sell-off. However, implied volatility is only one piece of the puzzle when developing an options trading strategy.
What do analysts think?
Obviously, options traders are evaluating a big move for Aqua Metals stocks, but what is the fundamental image of the company? Currently, Aqua Metals is a Zacks Rank # 3 (Hold) in the waste disposal service industry which ranks in the Top 49% of our Zacks Industry ranking. In the past 60 days, no analyst has increased their earnings estimates for the current quarter, while one analyst has revised the estimate down. The net effect widened our Zacks consensus estimate for the current quarter from a loss of 6 cents per share to a loss of 7 cents during this period.
Considering what analysts currently think of Aqua Metals, this huge implied volatility could mean a trade is growing. Often options traders look for options with high levels of implied volatility to sell premiums. This is a strategy used by many seasoned traders because it captures the decomposition. Upon expiration, the hope for these traders is that the underlying stock does not move as much as initially expected.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.