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A Pre-Earnings Analysis of Schlumberger before 3Q17

PART:
1 2 3 4 5 6 7 8
Part 5
A Pre-Earnings Analysis of Schlumberger before 3Q17 PART 5 OF 8

Schlumberger’s Stock Price Forecast for the Next 7 Days

SLB’s implied volatility in context

On October 2, 2017, Schlumberger’s (SLB) implied volatility was ~18%. Since then, its implied volatility has decreased from 19% to the current level. Implied volatility (or IV) reflects a stock’s potential price movement, as viewed by options traders. Schlumberger’s 2Q17 earnings were announced on July 21, 2017.

Schlumberger’s Stock Price Forecast for the Next 7 Days

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Stock price forecast for Schlumberger

Considering Schlumberger’s implied volatility, SLB stock could close between $67.57 and $71.07 in the next seven days. SLB’s stock price was $69.32 on October 2, 2017.

This estimate assumes a normal distribution of stock prices, a standard deviation of 1, and a probability of 68.2%.

SLB’s implied volatility in the past and now

On January 20, 2016, SLB’s implied volatility reached a high point of ~43%. Since then, SLB’S IV has subsided gradually and is currently lower than its past three-year average of 24.4%.

SLB comprises 6.8% of the Vanguard Energy ETF (VDE). VDE has increased 32% since January 20, 2016, compared to a 14% rise in SLB’s stock price during this period.

Implied volatility: Comparison with peers

Weatherford International’s (WFT) implied volatility on October 2, 2017, was ~55%, while Helmerich & Payne’s (HP) implied volatility was ~31% on the day. Helix Energy Solutions’ (HLX) implied volatility was ~56% on October 2.

On October 2, crude oil’s implied volatility was ~26%. Since June 30, 2017, the implied volatility readings for SLB and crude oil have declined.

Next, we’ll discuss investor bearishness in SLB stock as indicated by its short interest.

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