Is the Options Market Predicting a Spike in First Advantage (FA) Stock?

Investors in First Advantage Corporation FA need to pay close attention to the stock based on moves in the options market lately. That is because the Jan 17, 2025 $15 Put had some of the highest implied volatility of all equity options today.

What is Implied Volatility?

Implied volatility shows how much movement the market is expecting 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 there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.

What do the Analysts Think?

Clearly, options traders are pricing in a big move for First Advantage shares, but what is the fundamental picture for the company? Currently, First Advantage is a Zacks Rank #3 (Hold) in the Technology Services industry that ranks in the Top 28% of our Zacks Industry Rank. Over the last 60 days, no analyst increased the earnings estimates for the current quarter, and none dropped the estimates. The net effect has taken our Zacks Consensus Estimate for the current quarter from 26 cents per share to 25 cents in that period.

Given the way analysts feel about First Advantage right now, this huge implied volatility could mean there’s a trade developing. Oftentimes, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.

Looking to Trade Options?

Check out the simple yet high-powered approach that Zacks Executive VP Kevin Matras has used to close recent double and triple-digit winners. In addition to impressive profit potential, these trades can actually reduce your risk.

Click to see the trades now >>

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."

Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.7% per year. So be sure to give these hand picked 7 your immediate attention. 

See them now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

 
First Advantage Corporation (FA): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research