Did Schlumberger’s Implied Volatility Fall?



Schlumberger’s implied volatility

On December 22, 2016, Schlumberger (SLB) had an implied volatility of ~20%. Since Schlumberger’s 3Q16 financial results were announced on October 20, 2016, its implied volatility fell from 22.7% to the current level. Schlumberger accounts for 7.3% of the iShares US Energy ETF (IYE).

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What’s implied volatility?

Implied volatility shows investors’ views of a stock’s potential movement. However, it doesn’t forecast direction. Implied volatility is derived from an option pricing model. Investors should note that the correctness of implied volatility–suggested prices can be uncertain. On December 22, Helmerich & Payne’s (HP) implied volatility was ~29%. On December 21, CARBO Ceramics’ (CRR) implied volatility was 62%, while Flotek Industries’ (FTK) implied volatility was 76%. Recently, Flotek’s implied volatility rose. Read Why Did Flotek Industries’ Implied Volatility Spike in December? to learn more.

Energy stocks are usually correlated with crude oil prices. Did Schlumberger’s correlation with crude oil prices increase? We’ll discuss this in the next part.


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