Each week, I’ll give an overview of a stock and Licia Leslie will follow that up with a chart analysis the next day. Bill Griffo will chime in with macro analysis and Andrew Giovinazzi will then finish out the week with a volatility breakdown.

Have a stock YOU want us to review? Email my team here. – Mark

Hey Traders,

This week, I have the vol call on Mastercard Inc (Ticker: MA). Below is my snazzy vol chart showing IV30 in red – yes, it’s at year lows. 

However, MA seems to be moving with realized vol (blue line) picking up recently.

IV 30 in red and HV20 in blue for MA over the last year

MA hasn’t really moved much in a month and is basically in the same place. So why is the realized vol so high?

Something’s up …

The Difference Between Close-to-Close Vol for Time Periods

MA indeed hasn’t gone anywhere in a month: 

So if the time period was monthly, as in 12 closing periods per year, the realized vol would look low.  

However, 20 day realized vol means daily closes for the last 20 days. Below the candles, the daily ranges are quite big. This means MA is moving much more than the implied vol would indicate.

This is a good candidate for my Easy Button strategy. I’d say a long delta strangle on a breakout over $380. The lower IV should generate outsized returns on the calls when MA gets back to $390 or higher.

To Your Trading Success,

AG