Will Marathon Petroleum See Strong 3Q17 Results?

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Part 5
Will Marathon Petroleum See Strong 3Q17 Results? PART 5 OF 7

Gauging Marathon Petroleum’s Stock Price ahead of Its 3Q17 Results

Implied volatility in MPC

Here, we’ll estimate Marathon Petroleum’s (MPC) stock price range, based on its implied volatility, for the next 16-day period prior to its 3Q17 earnings release on October 26, 2017. The implied volatility in MPC has fallen 3.4% since July 3 to its current level of 22.8%.

Gauging Marathon Petroleum&#8217;s Stock Price ahead of Its 3Q17 Results

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Price range for MPC for 16-day period ending October 26

We can estimate MPC’s stock price range using MPC’s implied volatility of 22.8%, assuming a normal distribution of prices (bell-curve model) and a standard deviation of one, which implies a probability of 68.2%.

Marathon Petroleum’s stock price could close between $58.9 and $53.6 per share in the next 16 calendar days (ended October 26).

Implied volatility of peers

The implied volatility of Valero Energy (VLO), Phillips 66 (PSX), and PBF Energy (PBF) stocks has fallen 0.3%, 0.7%, and 0.5%, respectively, during the same period. Currently, the implied volatilities in VLO, PSX, and PBF stand at 21.3%, 16.2%, and 37.3%, respectively. The stock prices of VLO, PSX, and PBF have risen 13.7%, 12.2%, and 17.7%, respectively.

The SPDR Dow Jones Industrial Average ETF (DIA) and the SPDR S&P 500 ETF’s (SPY) have also seen declines in their implied volatilities, by 0.8% and 2.8%, respectively, since July 3.

DIA and SPY implied volatilities now stand at 7.5% and 7.2%, respectively. During the same period (since July 3), DIA and SPY have witnessed rises of 6.4% and 5.1%, respectively.


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