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Utility Stocks: Reviewing Implied Volatility and Short Interest

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Utility Stocks: Reviewing Implied Volatility and Short Interest PART 1 OF 3

Analyzing Utility Stocks with the Highest Implied Volatility

Utility stocks with high implied volatilities

On February 22, 2017, NRG Energy (NRG) had the highest implied volatility among the utility companies that make up the Utilities Select Sector SPDR ETF (XLU). NRG Energy’s implied volatility was 44.5% on February 22, 2017—3.6% less than its 15-day average.

Analyzing Utility Stocks with the Highest Implied Volatility

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Let’s take a look at the implied volatilities of other utility stocks on February 22, 2017.

  • AES’s (AES) implied volatility was 28.5%—5.8% more than its 15-day average.
  • FirstEnergy’s (FE) implied volatility was 18.8%—7% less than its 15-day average.
  • CenterPoint Energy’s (CNP) implied volatility was 18.1%—1.4% more than its 15-day average.
  • Exelon’s (EXC) implied volatility was 17.5%—4% lower than its 15-day average.

AES’s implied volatility gained the most compared to its 15-day average among the five utility stocks with high implied volatilities. On February 22, 2017, the stock fell 1.5% and its implied volatility rose 12.4%. It’s expected to announce its 4Q16 earnings on February 27, 2017. Wall Street anticipates a profit of $0.36 per share.

Utility stocks with low implied volatilities

On February 22, 2017, Southern Company (SO) had the lowest implied volatility of all the utility companies that make up XLU. Its implied volatility was 12.9%—12.6% lower than its 15-day average.

Let’s look at the other utility stocks with low implied volatilities on February 22.

  • NextEra Energy’s (NEE) implied volatility was 13%—5.6% less than its 15-day average.
  • WEC Energy’s (WEC) implied volatility was 13.1%—16.7% less than its 15-day average.
  • Duke Energy’s (DUK) implied volatility was 13.2%—5.3% less than its 15-day average.
  • PPL Corporation’s (PPL) implied volatility was 13.6%—1.9% lower than its 15-day average.

Large movements or expectations of large movements in stock prices can cause their implied volatilities to rise. In the next part, we’ll take a look at the returns for the above stocks.

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