More Coiled Springs

• Posted by Adam Warner
• on January 5th, 2010

Well, could probably keep changing the name and run a chart that looks just like this every day for a year. But I assume by that point some of these pups will have broken one way or another.

Until then I present BIDU, the next installement of our 365 part series “Better Know a Volatility Contraction”.

Yes, the high-flying Chinese Google gives the outward appearance of a wild moving name. But it’s pretty tame lately, to say the least. Average True Range gives a decent proxy for shorter term volatility and that is at the lows. It’s possible though to have a directional move in a non-volatile environment if it moved small each day, but in the same direction. BBWidth would pick up on that, but here too, nothing.

You would think a move out of range will have some legs.

Again though, don’t buy options gamma and pre-anticipate a breakout or breakdown, time is money. Just yet another name to keep on the volatility radar.

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