Volatility in the Market Has Created Some Interesting Pricing for These 5 Stocks

I wasn't in a hurry Friday. I wasn't in a hurry Monday. I wasn't in a hurry yesterday. If we continue to slide into the close - but we're flirting with lows that held yesterday. I may get more interested in a dip-buying opportunity here as the stop (yesterday's and today's low) becomes more evident. This has morphed into a market for scalping longs, generally intraday, not playing the hero. We often talk about taking the stairs higher and the elevator (or window) lower. For those who haven't had the pleasure of seeing it, this is a taste. For those around during the financial crisis or the dot-com bust, you know how ugly it can get in quick fashion. I'm not calling for a crash or anything that resembles those two events, but if you've been through them you know this is still a vanilla pullback, much overdue for equities. It's been needed for some time. That doesn't mean it will be enjoyable, but many healthy things in life are. The question now becomes whether this will end as a healthy pullback or become something worse. I don't know the answer to that. No one does. It's a question that can only be answered in hindsight. While we're almost clear of earning's season, there are some potential big movers lined up for Wednesday after the close. The volatility in the market has created some interesting pricing. Here's a few I can see: Innovative Industrial Properties , a REIT focused on the cannabis industry, has a move around 17% (wide spreads, so the exact number is imperfect) priced for the March 20th expiration. This appears extremely aggressive as the average 21-day post-earnings move is in the low single digits. To be fair, many of those moves occurred when this was a more traditional REIT, but even after the shift, the moves have registered in the mid-single-digits. Square , a well-known mobile payment processor, is pricing a 9% move by the end of the week. This is another name priced aggressively. It's not to say Square can't move this much, but on a three-day basis, it's been an infrequent occurrence to see 10% plus moves. Teladoc Health , a virtual health care provider, has been getting a ton of attention lately with the idea more and more folks will turn to seeking help from home rather than risking infection by hitting the doctor's office. The stock is pricing a 15.5% move, and while we haven't seen that on a single day post-closing and only once in the past 10 reports after 23 days... however, it has moved at least 10% nine straight times in that same 23 day post-earnings people. The best look here may be long volatility at the close TOMORROW as the stock has moved at least 10%, the vast majority over the next three weeks. It seems the real volatility begins the second-day post-earnings rather than the first. Elastic is an analytics, data, and cybersecurity name newer to the market. It's no surprise the option's market is pricing a 16% move by March monthly expiration, but in its short history, that marks the very high end of the four post-earnings moves we've seen from Elastic. Another one priced at the aggressive end of the scale. Lastly, there's Etsy . With eight straight double-digit moves, it's should be no surprise the online craft marketplace is priced for a 15% move by the close of trading this Friday. After three straight post-earnings moves lower ranging from 10.75% to 15.7%, bulls are praying for a reversal of the trend. With five straight three day moves of 9.2% to 28.6%, shorting volatility is a hard call here. While I wouldn't go straight long volatility, buying an iron condor with long legs 3% to 5% out of the money and shorting legs 10% out of the money. At the 5% and 10% levels, a trader would be risking around $1.80 to make $0.70, but I see it as a strong probability of at least breakeven. The market is not forgiving at the moment which means most traders shouldn't be aggressive. Less room for financial error weighs on the emotion state, so stay nimble and honor both stops for losses and profit-taking.

Volatility in the Market Has Created Some Interesting Pricing for These 5 Stocks

The market is not forgiving at the moment which means most traders shouldn't be aggressive.

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