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Is Devon Energy on Track to Beat 2Q17 Earnings Estimate?

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Part 8
Is Devon Energy on Track to Beat 2Q17 Earnings Estimate? PART 8 OF 9

Devon Energy’s Stock Range until Its 2Q17 Earnings Release

Devon Energy’s implied volatility

As of July 25, 2017, Devon Energy (DVN) had an implied volatility of ~33.6%, which is lower than its implied volatility of ~33.9% on May 18, 2017.

Devon Energy’s Stock Range until Its 2Q17 Earnings Release

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Weekly price range forecast

Based on its implied volatility of ~33.6% and assuming a normal distribution of prices (bell curve model) and a standard deviation of one, Devon Energy stock is expected to close between $34.52 and $31.44 until its 2Q17 earnings release on August 1, 2017. DVN stock will stay in that range ~68.0% of the time, based on the standard statistical formula. Implied volatility doesn’t forecast direction.

The SPDR S&P 500 ETF (SPY) has an implied volatility of 7.4%. Implied volatility is derived from the option pricing model. The data are thus theoretical in nature, and there’s no guarantee those forecasts will be correct.

Devon Energy’s moving averages

Currently, DVN is trading below its 200-day moving average but above its 50-day moving average. In fact, DVN regained its 50-day moving average on July 25, 2017, when DVN stock closed at $32.98. Its 200-day and 50-day moving averages are $40.57 and $32.85, respectively. That means that DVN’s 50-day moving average is below its 200-day moving average, which is technically a bearish sign. Currently, DVN stock is oversold since it’s stretched below its 200-day moving average.

Peers

DVN’s peers such as ConocoPhillips (COP), Consol Energy (CNX), and Marathon Oil (MRO) have implied volatilities of ~25.3%, ~43.2%, and ~34.2%, respectively. All these companies have shown considerable variations in implied volatilities when compared to their implied volatilities of ~26.4%, ~42.2%, and ~41.0%, respectively, at the start of June 2017. The First Trust ISE-Revere Natural Gas ETF (FCG) invests in natural gas producers, and the Direxion Daily S&P Oil & Gas Exploration & Production Bear 3X ETF (DRIP) is a leveraged inverse fund that invests in oil and gas exploration and production companies.

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