Implied Volatility Rising on Spartan Motors Inc.; SPAR, PCAR, NAV

Start Your Subscription

After your trial, it's only $69/month

Here's what Learning Markets Options Coaching includes:

	Daily Options Trade Ideas & Updates (Sample) Each day you'll get ideas for options trades triggered by live market data.

	Weekly Live Trading Event (Sample) Every week you'll join our live trading session online, plus it's recorded for viewing later.

	Daily Email Alerts & Updates (Sample) We make it easy by alerting you when the latest updates are available.

	Options Trading Demonstrations (Sample) You'll see exactly how to execute a strategy as we show you in a brokerage platform.

	Question and Answer Discussions (Sample) Live, during events and on discussion boards, get answers to your questions.

When you click one of these secure form options you'll enter your information on our subscription form. You'll then get an email with instructions for accessing the Learning Markets Coaching site.

By clicking above you agree to the terms and conditions for use of the coaching product.

Implied Volatility Rising on Spartan Motors Inc.; SPAR, PCAR, NAV

Option traders are pushing implied volatility levels higher at an accelerating clip on Spartan Motors Inc.'s (SPAR) options. SPAR's implied volatility levels jumped from 58.10 percent yesterday to 68.31 percent today---a day-over-day gain of 17.58 percent, which sets SPAR up for some interesting option trades.

Learn how to use the volatility skew and other trading indicators in Learning Markets Options Coaching for Only $5.

Of course, it is always important to keep implied volatility levels in perspective relative to what they have been in the past for a specific stock because what is considered high implied volatility for one stock may actually be considered low implied volatility for another stock. Looking back at the implied volatility levels for SPAR during the past year, we can see that the highest level SPAR has seen is 136.49 percent and the lowest level SPAR has seen is 52.11 percent. So SPAR's current implied volatility level of 68.31 is closer to its low for the year.

Seeing that SPAR's implied volatility is rising and that it is closer to its low for the year, you now have to determine if you are bullish or bearish on the stock.

If you are bullish and want to be more conservative, you may want to look at doing a pairs trade---buying a call on one stock and buying a put on the other stock---between SPAR and PACCAR Inc. (PCAR) or between SPAR and Navistar International Corp. (NAV) to hedge some of the risk you may take on by trading SPAR alone. NAV and PCAR are both part of the Trucks & Other Vehicles industry.

You may also want to look at employing one of the following strategies if you are bullish:

- Selling a naked put

- Entering a vertical spread by buying an ITM call and selling an ATM call

- Entering a vertical spread by buying an OTM put and selling an ATM put

On the other hand, if you are bearish, you may want to look at employing one of the following strategies:

- Selling a naked call

- Entering a vertical spread by buying an OTM call and selling an ATM call

- Entering a vertical spread by buying an ITM put and selling an ATM put

Want to learn how to trade these strategies? Check out Learning Markets Options Coaching for Only $5.