Oilfield services stocks with high implied volatilities
On December 6, 2016, Tidewater (TDW) had the highest implied volatility among the OFS (oilfield equipment and services) companies that are part of the VanEck Vectors Oil Services ETF (OIH). Tidewater’s implied volatility was 131.5%, while its 15-day average implied volatility was 138.6% on December 6. Its volatility was ~5.1% below its 15-day average.
Previously, Tidewater’s negotiations with lenders and bondholders were extended until November 11, 2016. The negotiations have been extended again to January 2017. Uncertainty surrounding Tidewater’s debt kept the stock’s implied volatility elevated.
Let’s take a look at the volatilities of other OFS stocks on December 6:
- Seadrill (SDRL) – 105.9%, 5.7% below its 15-day average
- CARBO Ceramics (CRR) – 79.4%, 3.5% above its 15-day average
- Noble (NE) – 65.3%, 0.4% below its 15-day average
- Weatherford International (WFT) – 65%, 17.1% below its 15-day average
Large movements in stocks can explain their high implied volatilities. In the next part, we’ll look at these stocks’ returns.
OFS stocks with low implied volatilities
Schlumberger (SLB) has the lowest implied volatility figure among OFS companies that are part of OIH. Its implied volatility is 21.7%. Its 15-day average implied volatility is 23%. Its current implied volatility is 5.4% lower than its 15-day average.
OFS stocks with low implied volatilities on December 6 were as follows:
- Baker Hughes (BHI) – 25.6%, 6.6% lower than its 15-day average
- Halliburton (HAL) – 27.0%, 7.9% lower than its 15-day average
- FMC Technologies (FTI) – 27.5%, 22.6% lower than its 15-day average
- Core Laboratories NV (CLB) – 30%, 1.9% lower than its 15-day average
These low-volatility stocks are mostly industry leaders with relatively strong financial positions and steady earnings. Their status explains why they also trade with lower implied volatilities.