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A Look At Banco Santander Through Benzinga's Securities Lending Volatility Index

Christopher Sappo

Benzinga’s Securities Lending Volatility Index (SLVX) Powered by Tidal Markets, is an indicator that forecasts stock market activity for broader indices and individual securities.

To demonstrate the use of the SLVX as a stock market indicator, we show how changes in the SLVX predicted a -5.44% decline in Banco Santander over 8 trading days at the beginning of May 2019. 

Banco Santander (SAN) together with its subsidiaries, provides various retail and commercial banking products and services for individual and corporate clients worldwide.

At the beginning of April, SAN experienced a strong price rally by gaining 13.23% over the span of nearly three weeks of trading between March 28th and April 17th.

After the spike in share price, SAN lost -5.93% in the proceeding 6 trading days, closing on April 25th at $4.91 a share.

On the following day when it appeared SAN’s price deterioration was ending, and the stock was on the rise again, the SLVX showed a quick uptick in parallel, indicating that the stocks most recent descent was far from over.

On the beginning day of our analysis, 4/26/2019, the SLVX reflected a volatility rate of 6.368 – which is below their 1Q19 average SLVX volatility of 7.59. But as SAN briefly started to rise in price again beginning on April 26th for the next two trading days, the SLVX increased to unprecedented levels of over 180, denoting a significantly strong uptick in volatility.

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Figure 1

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Figure 2

Between April 26th and May 7th, 2019, Banco Santander lost -5.44%, or $0.27 per share, over an eight day stretch. Meanwhile, the SLVX saw the volatility of SAN both rally to levels of 180 during the stocks temporary rebound, before falling in volatility as the share price of SAN continued to worsen.

As we continue to watch SLVX values of SAN into the mid-weeks of May, we’ve seen volatility values plateau. If the SLVX continues to remain at muted levels for SAN; expect to see a rebound in price and a potential buy-back opportunity in the near future.

Image sourced from Pixabay

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