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How Volatile Is National Oilwell Varco?

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National Oilwell Varco’s implied volatility

On August 16, 2016, National Oilwell Varco (NOV) had an implied volatility of ~35%. Since NOV’s 2Q16 financial results were announced on July 28, 2016, its implied volatility decreased from ~39% to the current level.

NOV comprises 0.08% of the iShares MSCI ACWI Low Carbon Target ETF (CRBN). The energy sector makes up 5.9% of CRBN.

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What does implied volatility mean?

Implied volatility (or IV) reflects investors’ views of a stock’s potential movement. However, IV does not forecast direction. Implied volatility is derived from an option pricing model. Investors should note that the correctness of an implied volatility level suggests that prices can be uncertain. FMC Technologies’s (FTI) volatility on August 16 was 31.3%—lower than NOV’s.

Energy stocks are typically correlated with crude oil price. Has NOV’s correlation with the crude oil price increased? Let’s find out in the next part of this series.

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