27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
Some of the biggest trading opportunities in the market come from the most volatile stocks in the market. These stocks can also be dangerous to trade, creating a high-risk/high-reward scenario.
Volatility can be difficult to predict, but beta is one metric traders use to identify stocks that are most prone to volatility.
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Beta Explained
Beta is simply a measure of the relative volatility of a stock. Beta is calculated in relation to a benchmark, such as the S&P 500 for U.S. stocks. A beta of 1.0 means that a stock has historically demonstrated volatility in line with its benchmark. A beta greater than 1.0 suggests the stock is more volatile than the benchmark, and a beta less than 1.0 suggests the stock is less volatile than the benchmark.
For example, a U.S. stock with a beta of 1.5 has historically been 50% more volatile than the S&P 500. Typically, the stocks with the highest betas tend to be smaller-cap stocks, while large-cap stocks have lower betas.
8 High-Beta Stocks
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Here’s a look at the eight S&P 500 stocks with the highest betas, according to Finviz.
- Advanced Micro Devices, Inc. (NASDAQ:AMD), 3.09 beta.
- United Rentals, Inc. (NYSE:URI), 2.71 beta.
- Freeport-McMoRan Inc (NYSE:FCX), 2.51 beta.
- Devon Energy Corp (NYSE:DVN), 2.38 beta.
- Marathon Oil Corporation (NYSE:MRO), 2.31 beta.
- SVB Financial Group (NASDAQ:SIVB), 2.19 beta.
- IPG Photonics Corporation (NASDAQ:IPGP), 2.17 beta.
- Navient Corp (NASDAQ:NAVI), 2.14 beta.
Benzinga’s Take
Several of these high-beta stocks have performed extremely well in 2019, including a 112% gain from AMD. However, these large positive returns from high-beta stocks occur much more often during periods of strong overall market returns, and traders can expect many of these same high-beta stocks to be among the worst performers during the next market downturn.
Do you agree with this take? Email feedback@benzinga.com with your thoughts.
Related Links:
16 S&P 500 Stocks With The Worst Analyst Ratings
15 Highest-Rated Analyst Stock Picks In The S&P 500
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.