Utilities to Handle with Care: XLU Implied Volatility
XLU’s implied volatility
On March 31, 2017, the implied volatility of the Utilities Select Sector SPDR (XLU) was 12.6%, which was marginally higher than its 15-day average implied volatility.
Interested in NRG? Don't miss the next report.
Receive e-mail alerts for new research on NRG
As the graph shows, a fall in XLU’s implied volatility has been generally associated with gains in stock prices, while falls in stock prices have been associated with rises in implied volatility.
Notably, among the S&P 500 utilities, the largest merchant power stock, NRG Energy (NRG), had the highest implied volatility (36%) on March 31, 2017.
To learn more about NRG Energy, read Market Realist’s series Why NRG Energy Stock Could Continue to Soar.
Continue to the next and final part of this series for an examination of the major US utilities’ price targets—and what these targets could mean for investors over the next 12 months.