Is It Time for SPN’s Options Traders to Make a Move?



Superior Energy Services’ implied volatility

On September 14, 2016, Superior Energy Services (SPN) had an implied volatility of ~51%. Since SPN’s 2Q16 financial results were announced on July 25, 2016, its implied volatility has remained unchanged.

SPN makes up 0.02% of the iShares Core Russell US Value ETF (IUSV). The energy sector makes up 12.5% of IUSV.

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What does implied volatility mean?

Implied volatility (or IV) reflects investors’ views on a stock’s potential movements. However, IV doesn’t forecast direction. Implied volatility is derived from an option pricing model. Note that the correctness of implied volatility suggested prices can be uncertain. Precision Drilling’s (PDS) implied volatility on September 14 was 48.3%, lower than SPN’s.

Energy stocks’ prices typically correlate with crude oil prices. Has SPN’s correlation with crude oil increased? Let’s find out in the next part of the series.


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