Investors in Axos Financial, Inc. (AX) should pay close attention to the recent activity in the options market. The Oct 18, 2024 $37.50 Call option has displayed unusually high implied volatility, a key indicator that the market expects significant price fluctuations for the stock in the future.
Implied volatility reflects the degree of price movement anticipated in an asset. High implied volatility suggests investors are bracing for a substantial move in either direction, potentially upward or downward. This could be driven by upcoming events, anticipated announcements, or other factors that may lead to a strong rally or a significant sell-off.
While implied volatility provides valuable insights, it’s just one piece of the puzzle when crafting an options trading strategy. To gain a comprehensive understanding, it’s crucial to consider the fundamentals of the underlying company.
Currently, Axos Financial holds a Zacks Rank #3 (Hold) within the Financial – Miscellaneous Services industry, which ranks within the top 29% of Zacks Industry Rank. However, recent analyst sentiment towards Axos Financial has been mixed. Over the past 60 days, no analysts have raised their earnings estimates for the current quarter, while three have lowered their projections. Consequently, the Zacks Consensus Estimate for the current quarter has shifted from $1.86 per share to $1.84.
The high implied volatility, in conjunction with the analysts’ cautious outlook, suggests the possibility of a trading opportunity emerging. Oftentimes, options traders seek out options with high implied volatility to sell premium, a strategy employed by experienced traders to capitalize on time decay. Their goal is for the underlying stock to remain within a limited range, thus allowing them to profit from the premium collected.
The combination of high implied volatility and analyst sentiment offers valuable insights for investors and traders seeking to navigate the potential movements in Axos Financial stock. By understanding the implications of these factors, they can make informed decisions about their investment strategies.
