uploads///EOG Q Post Implied Volatility

What Could EOG Resources’ Implied Volatility Mean for Its Stock Price?


Nov. 10 2016, Updated 4:04 p.m. ET

EOG Resources’ implied volatility

On November 7, 2016, EOG Resources (EOG) had an implied volatility of ~29.53%, which is ~20.15% below its 260-trading day historical price volatility of ~36.98%. After its earnings were announced on November 3, 2016, EOG’s implied volatility fell from ~35.7% to ~29.5% in three sessions.

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30-day stock price forecast using implied volatility

Assuming normal distribution of prices (bell curve model) and a standard deviation of one, based on its implied volatility of ~29.53%, EOG’s stock is expected to close at between $101.34 and $85.52 after 30 calendar days. Based on the standard statistical formula, EOG’s stock should stay in the range ~68% of the time.

Other upstream stocks

On November 7, 2016, the stocks of Parsley Energy (PE), Gulfport Energy (GPOR), and Consol Energy (CNX) had implied volatilities of ~36.00%, ~44.69%, and ~59.92%. The SPDR S&P 500 ETF (SPY) had an implied volatility of ~14.7%.

Remember, implied volatility shows the market’s opinion of a stock’s potential moves, but it doesn’t forecast direction. Implied volatility is derived from option pricing model, which means that the data is theoretical in nature—and that there is no guarantee that these forecasts will be correct.


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