Analyzing Denbury Resources’ Implied Volatility
Denbury Resources’ implied volatility
On August 9, 2017, Denbury Resources (DNR) had implied volatility of ~87.5%, which is lower than its implied volatility of ~91.6% on August 4, 2017.
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DNR’s weekly price range forecast
Based on its implied volatility of ~87.5%, Denbury Resources stock is expected to close between $1.28 and $1.64 in the next seven calendar days. This scenario assumes a bell curve model with the normal distribution of prices, 365 days in a year, and a standard deviation of 1. Denbury Resources’ stock could stay in this range ~68% of the time, based on the standard statistical formula.
On August 9, 2017, the SPDR S&P 500 ETF (SPY) had implied volatility of ~9.2%. Implied volatility does not forecast direction, and it is calculated from the option pricing model. This means the data is theoretical, and there is no guarantee these forecasts will be correct.
Denbury Resources’ moving averages
Currently, Denbury Resources is trading below its 200-day and 50-day moving averages. On August 9, DNR’s stock price closed at $1.46, and its 200-day and 50-day moving averages stood at $2.53 and $1.47, respectively.
DNR’s 50-day moving average stood below its 200-day moving average, which is technically a bearish sign. Currently, DNR’s stock price is oversold, as it is stretched far below its 200-day moving average.
Among DNR’s peers, Devon Energy (DVN), Kosmos Energy (KOS), and Occidental Petroleum (OXY) have respective implied volatilities of ~38.0%, ~48.7%, and ~21.3%. Devon Energy and Kosmos Energy have shown decreasing implied volatilities when compared with their implied volatilities of ~38.7% and ~54.2%, respectively, on August 4, 2017.
Like DNR, Occidental Petroleum is active in the enhanced oil recovery space. The First Trust Natural Gas ETF (FCG) invests in natural gas producers, and the Energy Select Sector SPDR ETF (XLE) invests ~95% of its total assets in oil and gas companies.