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What Does Baker Hughes’s Implied Volatility Show?

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Jan. 12 2017, Updated 9:07 a.m. ET

Baker Hughes’s implied volatility

On January 10, 2017, Baker Hughes (BHI) had an implied volatility of 29.5%. Since Baker Hughes’s 3Q16 financial results were announced on October 25, 2016, its implied volatility has increased marginally. Baker Hughes accounts for 3.3% of the SPDR S&P Oil & Gas Equipment & Services ETF (XES). The Oil & Gas Equipment & Services industry makes up 66.6% of XES.

On January 10, Flotek Industries’ (FTK) implied volatility was ~78%, while Helix Energy Solutions’ (HLX) implied volatility was ~56%. On the same day, CARBO Ceramics’ (CRR) implied volatility was ~72%.

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What does “implied volatility” mean?

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 prices can be uncertain.

On November 1, 2016, Baker Hughes’s implied volatility saw a sudden spike following its partnership deal with General Electric’s (GE) oil and gas business. Read Can the BHI–GE Partnership Benefit from Global Growth? to learn more.

Next, we’ll discuss investors’ short interest in Baker Hughes stock.

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