On March 17, 2017, Schlumberger’s (SLB) implied volatility was 16.6%. Since its 4Q16 financial results were announced on January 20, Schlumberger’s implied volatility has fallen from 17%.
IV (implied volatility) reflects investors’ views of a stock’s potential movement. However, IV does not forecast direction. IV is derived from an option pricing model. Investors should note that the correctness of implied volatility suggested prices can be uncertain.
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By comparison, Helmerich & Payne’s (HP) implied volatility on March 17 was ~29%, while Helix Energy Solutions’ (HLX) implied volatility was ~55% on that day. TechnipFMC’s (FTI) implied volatility on March 17 was ~28%.
Based on Schlumberger’s implied volatility and assuming a normal distribution of stock prices and a standard deviation probability of 68.2%, SLB’s stock could likely close between $81.38 and $77.72 in the next seven days. SLB’s stock price was $79.55 on March 17, 2017.
Notably, SLB makes up 3.7% of the SPDR S&P Oil & Gas Equipment & Services ETF (XES). You can read more about how Schlumberger performed in 4Q16 in Market Realist’s series Why Did Schlumberger’s 4Q16 Earnings Beat Estimates?
Continue to the next part for a look at what Schlumberger’s short interest suggests.