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What Did the Market Suggest about Weatherford on September 22?

PART:
1 2 3
Part 2
What Did the Market Suggest about Weatherford on September 22? PART 2 OF 3

Analyzing Weatherford’s Next 7-Day Stock Price Forecast

Weatherford’s implied volatility

On September 22, 2017, Weatherford International’s (WFT) implied volatility was ~47%. Weatherford’s 2Q17 financial results were broadcast on July 28. Since July 28, 2017, Weatherford’s implied volatility has fallen from 62% to the current level. Since July 28, Weatherford’s stock price has risen 10%. Weatherford accounts for 3.1% of the SPDR S&P Oil & Gas Equipment & Services ETF (XES). XES has fallen 8% in the past year—compared to a 24% fall in Weatherford’s stock price during the same period.

Weatherford’s seven-day stock price forecast

Weatherford stock will likely close between $4.54 and $3.98 in the next seven days. The estimate is based on Weatherford International’s implied volatility. It assumes a normal distribution of stock prices and one standard deviation probability of 68.2%. Weatherford International’s stock price was $4.26 on September 22, 2017.

Analyzing Weatherford’s Next 7-Day Stock Price Forecast

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Implied volatility for Weatherford’s peers

Implied volatility shows a stock’s potential price movement, as viewed by option traders. On September 22, McDermott International’s (MDR) implied volatility was 40.3%, which implies that its price can vary between $7.40 and $6.62 in the next seven days. TechnipFMC’s (FTI) implied volatility was ~26% on September 22. TechnipFMC’s stock price can vary between $27.79 and $25.87 in the next seven days.

Crude oil’s implied volatility

On September 22, 2017, crude oil’s implied volatility was 24.1%. Since June 30, 2017, Weatherford International’s implied volatility has fallen sharply from ~81% to ~47%. During the same period, crude oil’s implied volatility fell from 27% to the current level. The S&P 500 Index (SPX-INDEX) has risen 3% since June 30, 2017. The energy sector accounts for 5.7% of SPX-INDEX.

Next, we’ll discuss Weatherford International’s correlation with the crude oil price.

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