Implied Volatility Rising for Tabula Rasa HealthCare (TRHC) Stock Options

Investors in Tabula Rasa HealthCare, Inc. TRHC needs to pay close attention to the stock based on recent moves in the options market. Indeed, the $12.50 call on July 15, 2022 had one of the highest implied volatilities of any stock option today.

What is implied volatility?

Implied volatility shows the magnitude of the movements expected by the market in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean that there is an upcoming event that could cause a big rally or a huge sale. However, implied volatility is only one piece of the puzzle when developing an options trading strategy.

What do analysts think?

Clearly, options traders are pricing in a big move for Tabula Rasa HealthCare stock, but what is the fundamental picture for the company? Currently, Tabula Rasa HealthCare is a Zacks Rank #3 (Hold) in the Medical Information Systems industry that ranks in the bottom 40% of our Zacks Industry Rankings. In the past 60 days, two analysts raised their earnings estimates for the current quarter, while one lowered their estimates. The net effect widened our Zacks consensus estimate for the current quarter from a loss of 3 cents per share to a loss of 4 cents in this period.

Given what analysts think of Tabula Rasa HealthCare right now, this huge implied volatility could mean a trade is developing. Often options traders look for options with high levels of implied volatility to sell at premiums. This is a strategy that many seasoned traders use because it captures the breakdown. At expiration, the hope of these traders is that the underlying stock does not move as much as originally expected.

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Tabula Rasa Healthcare (TRHC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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