Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Volatility: Apple vs. Exxon


Whose paper would you be better off owning?

This is Exxon (XOM) here, and as you can see, the implied volatility path over the past year is not all that importantly different from Apple (AAPL). Apple peaked a bit higher, but returned to old levels, similar to here.

One big difference, though: XOM options change hands very much in line with realized volatility in XOM itself. Contrast that with AAPL, where options trade at about double, by that metric.

Now, this isn't an apples-to-oranges comparison. Options merit a premium to stock volatility if there is high likelihood of a gap move. Consider a small biotech as an extreme example. If news is expected, options may trade 10 or 20 times as high in volatility terms.

And Apple is certainly more likely to have a news event than Exxon.

But even factoring that in, I'd rather own paper with a picture like Exxon than I would in a picture like Apple.

No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos