uploads///PXD Q Post Implied Volatility

What Does PXD’s Implied Volatility Mean for Its Stock Price?


Nov. 7 2016, Updated 10:04 a.m. ET

Pioneer Natural Resources’ implied volatility

As of November 3, 2016, Pioneer Natural Resources (PXD) had an implied volatility of ~34.4%, ~12.1% lower than its 260-trading-day historical price volatility of ~39.2%. 

After its earnings were announced on November 1, 2016, Pioneer Natural Resources’ implied volatility fell from ~35.3% to ~34.4% in two sessions.

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Pioneer Natural Resources’ 30-day stock price forecast using implied volatility

Assuming a normal distribution of prices (bell curve model) and a standard deviation of one, based on its implied volatility of ~34.4%, Pioneer Natural Resources’ stock is expected to close between $190.26 and $156.08 after 30 calendar days. 

Based on the standard statistical formula, Pioneer Natural Resources’ stock will stay in this range ~68% of the time.

Other upstream stocks

As of November 3, 2016, upstream stocks Parsley Energy (PE), Gulfport Energy (GPOR), and Diamondback Energy (FANG) have implied volatilities of ~38.5%, ~45.1%, and ~37.7%, respectively. The SPDR S&P 500 ETF (SPY) has implied volatility of ~17.1%.

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


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