Schlumberger’s implied volatility
On September 1, 2016, Schlumberger (SLB) had an implied volatility of ~24%. Since SLB’s 2Q16 financial results were announced on July 21, 2016, its implied volatility fell from 22.6% to its current level.
SLB makes up 0.4% of the iShares MSCI ACWI Low Carbon Target ETF (CRBN). The energy sector makes up 5.8% of CRBN.
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. Investors should note that the correctness of implied volatility’s suggested prices can be uncertain. Patterson-UTI Energy’s (PTEN) implied volatility on September 1 was 43.4%—higher than SLB’s.
Energy stocks are typically correlated with crude oil’s price. Has SLB’s correlation with the crude oil increased? Let’s find out in the following article.