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Analyzing Devon Energy's Performance in 2Q17

PART:
1 2 3 4 5 6 7 8
Part 6
Analyzing Devon Energy's Performance in 2Q17 PART 6 OF 8

What’s Devon Energy’s Implied Volatility?

Devon Energy’s implied volatility

As of August 2, 2017, Devon Energy (DVN) had an implied volatility of ~40.7%, which is lower than its implied volatility of ~33.6% on July 25, 2017.

What&#8217;s Devon Energy&#8217;s Implied Volatility?

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Price range forecast

Based on its implied volatility of ~40.7% and assuming bell curve model which has a normal distribution of prices 365 days a year and a standard deviation of one, Devon Energy stock is expected to close between $35.28 and $31.52 in the next seven calendar days. Devon Energy stock will stay in this range ~68% of the time based on the standard statistical formula.

The SPDR S&P 500 ETF (SPY) has an implied volatility of 8.0%. The implied volatility doesn’t forecast stocks’ direction. Implied volatility is derived from the option pricing model. The data are theoretical—there isn’t a guarantee that the forecast will be correct.

Moving averages

Currently, Devon Energy is trading below its 200-day moving average and above its 50-day moving average. Devon Energy regained its 50-day moving average seven trading sessions ago on July 25, 2017. On August 2, Devon Energy’s stock price closed at $33.40, while its 200-day and 50-day moving averages were $40.26 and $32.31, respectively. The company’s 50-day moving average stands below its 200-day moving average—a bearish sign. Currently, Devon Energy’s stock price is oversold. It’s stretched below its 200-day moving average.

Peers

As of August 2, 2017, Devon Energy’s peers ConocoPhillips (COP), Consol Energy (CNX), and Marathon Oil (MRO) have implied volatilities of ~23.9%, ~40.8%, and ~45.2% All of these companies have shown an increase in their implied volatilities compared to their implied volatilities of ~25.3%, ~43.2%, and ~34.2% on July 25, 2017.

The ISE-Revere Nat Gas Index Fund (FCG) invests in natural gas producers, while the Energy Select Sector SPDR ETF (XLE) generally invests at least 95% of its total assets in oil and gas companies.

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