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What's the Market Saying about Schlumberger?

PART:
1 2 3 4
Part 2
What's the Market Saying about Schlumberger? PART 2 OF 4

Schlumberger’s 7-Day Stock Price Forecast as of March 31

Schlumberger’s implied volatility

On March 31, 2017, Schlumberger’s (SLB) implied volatility was 17.6%. Since it announced its 4Q16 financial results on January 20, 2017, its implied volatility has risen from 17.1% to 17.6%.

SLB makes up 3.2% of the SPDR S&P Oil & Gas Equipment & Services ETF (XES). You can read how Schlumberger performed in 4Q16 in Market Realist’s Why Did Schlumberger’s 4Q16 Earnings Beat Estimates?

Implied volatility for SLB’s peers

National Oilwell Varco’s (NOV) implied volatility on March 31, 2017, was ~32.0%, and Precision Drilling’s (PDS) was ~45.0%. McDermott International’s (MDR) implied volatility that day was ~47.0%.

Schlumberger’s 7-Day Stock Price Forecast as of March 31

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Implied volatility and Schlumberger’s stock price forecast

Based on Schlumberger’s implied volatility and assuming normal distribution of stock prices and a standard deviation probability of 68.2%, SLB stock will likely close between $76.20 and $80 in the next seven days. It was trading at $78.10 on March 31, 2017.

What does implied volatility mean?

Implied volatility (or IV) reflects investors’ views of a stock’s potential movement. However, IV doesn’t forecast direction. IV is derived from an option pricing model. It’s worth noting that the correctness of an implied volatility’s suggested price can be uncertain.

Energy stocks are typically correlated with crude oil prices. So what’s SLB’s correlation with the price of crude oil? Let’s find out in the next part of this series.

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