In this clip from The Macro Show, Robert McGroarty explains how the implied volatility table can be a useful complement to other tools in the Hedgeye toolbox.
For example, Utilities (XLU) had a higher low and a lower high in the Risk RangeTM Signals today, which could lead some to get less bearish. A look at the iVol table helps explain why we remain short.
XLU’s implied volatility is currently -7%, with a negative Z-score (a measurement of a score's relationship to the mean in a group of scores).
“That’s an indication for it being more bearish,” McGroarty explains. “You’ve got to combine it all: Risk Ranges, the iVol table, the volume and volatility of the underlying product, and paying attention in the Real-Time Alerts – has Keith McCullough gone in and hit the button on XLU – and he hasn’t, so that also tells you something.”
“Don’t overfocus on the iVol table, but certainly use it to help leverage your decision making and timing,” McGroarty adds. “It’s all about timing and execution.”
McGroarty hosts Subscriber Orientation weekly to explain Hedgeye’s resources and answer questions for new members of Hedgeye Nation. Click here to watch recent episodes.
