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Is W&T Offshore's Stock Rally about to Take a Breather?

PART:
1 2 3 4 5
Part 3
Is W&T Offshore's Stock Rally about to Take a Breather? PART 3 OF 5

What W&T Offshore’s Implied Volatility Tells Us

WTI’s implied volatility

On September 29, 2017, W&T Offshore (WTI) had an implied volatility of ~74.0%, which is higher than its implied volatility of ~57.2% at the end of 2Q17. The higher implied volatility in WTI can be attributed to the ~74.0% rise in WTI’s stock price over the past six weeks.

What W&amp;T Offshore&#8217;s Implied Volatility Tells Us

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WTI’s price range

Based on W&T Offshore’s implied volatility of ~74.0% and assuming the normal distribution of prices (calculating 365 days in a year and a standard deviation of one), the stock is expected to close between $3.36 and $2.74 in the next thirty calendar days.

WTI’s stock will likely stay in this range 68% of the time. On September 29, WTI’s stock price closed at $3.05.

Peer price ranges

On September 29, 2017, ConocoPhillips (COP) had an implied volatility of ~21.5%, which means that COP stock is expected to close between $51.54 and $48.56 in the next thirty calendar days. On September 29, COP’s stock price closed at $50.05.

EOG Resources (EOG) had an implied volatility of ~20.8%, which means that EOG stock is expected to close between $99.52 and $93.96 in the next seven calendar days. On September 29, EOG’s stock price closed at $96.74.

Based on the input used in these calculations of price ranges, there’s a 68% probability that these stocks will close in their predicted ranges during the given period.

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