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Understanding Occidental Petroleum’s 2Q17 Earnings

PART:
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Part 8
Understanding Occidental Petroleum’s 2Q17 Earnings PART 8 OF 8

Analyzing Occidental Petroleum’s Implied Volatility

Occidental Petroleum’s implied volatility

On August 2, 2017, Occidental Petroleum (OXY) had an implied volatility of ~22.8%, which is higher than its implied volatility of ~22.3% on July 25, 2017.

Analyzing Occidental Petroleum’s Implied Volatility

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OXY’s weekly price range forecast

Based on its implied volatility of ~22.8%, we can assume a normal distribution of prices, a 365-days year, and a standard deviation of one. Based on these factors, Occidental Petroleum stock is expected to close between $59.30 and $63.44 in the next seven calendar days. Occidental Petroleum stock could stay in this range ~68% of the time, based on the standard statistical formula.

The SPDR S&P 500 ETF (SPY) has implied volatility of ~8.0%. Implied volatility does not forecast direction. Implied volatility is derived from the option pricing model, which means the data is theoretical. So, there is no guarantee these forecasts will be correct.

Occidental Petroleum’s moving averages

Currently, OXY is trading below its 200-day moving average but above its 50-day moving average. OXY regained its 50-day moving average on July 25, 2017, which was seven trading sessions ago as of this analysis.

On August 2, OXY’s stock price closed at $61.37. Its 200-day and 50-day moving averages stood at $64.03 and $60.26, respectively. OXY’s 50-day moving average stood below its 200-day moving average, which is a bearish sign. Currently, OXY’s stock price is oversold, as it is stretched below its 200-day moving average.

Peers

OXY’s peers ConocoPhillips (COP), Consol Energy (CNX), and Marathon Oil (MRO) have implied volatilities of ~23.9%, ~40.8%, and ~45.2%. These companies have shown an increase in their implied volatilities when compared with their implied volatilities of ~25.3%, ~43.2%, and ~34.2% on July 25, 2017.

The ISE-Revere Nat Gas Index ETF (FCG) invests in natural gas producers.

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