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Which Midstream Stocks Have the Highest Implied Volatility?

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Midstream stocks with high implied volatilities

On January 13, 2017, NGL Energy Partners (NGL) had an implied volatility of 39.6%—the highest among midstream companies that make up the Alerian MLP ETF (AMLP). NGL Energy Partners’ 15-day average implied volatility is 42.5%. Its current volatility is 6.9% below its 15-day average.

NGL Energy Partners’ implied volatility rose 5.4% on December 20, 2016. Its stock rose 2.1% that day. According to the company’s release, NGL Energy Partners “was approved by the United States Bankruptcy Court as the high bidder for certain assets of Murphy Energy Corporation.”

Stocks that saw large movements or that are expected to see large movements in the future could have high implied volatilities. In the next part of this series, we’ll analyze NGL Energy Partners’ returns.

For now, let’s look at other midstream stocks with high implied volatilities as of January 13, 2017:

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  • EnLink Midstream (ENLC) – 37.3%, which is 5.7% below its 15-day average
  • Cheniere Energy Partners (CQH) – 33.4%, which is 0.4% below its 15-day average
  • Western Refining Logistics (WNRL) – 33.1%, which is 1.3% below its 15-day average
  • Summit Midstream Partners (SMLP) – 33%, which is 5.9% above its 15-day average

The rise in Summit Midstream Partners’ implied volatility compared to its 15-day average is the highest among the five midstream stocks with the highest implied volatilities. On January 11, 2017, Wells Fargo changed its rating from “market perform” to “outperform” on the stock.

Midstream stocks with low implied volatilities

Midstream stocks with low implied volatilities on January 13 were:

  • Magellan Midstream Partners’ (MMP) implied volatility was 16.2%—4.3% less than its 15-day average.
  • Spectra Energy Partners’ (SEP) implied volatility was 16.9%—13.5% lower than its 15-day average.
  • Buckeye Partners’ (BPL) implied volatility was 19.9%—6.2% more than its 15-day average.
  • Enterprise Products Partners’ (EPD) implied volatility was 20.8%—3.3% less than its 15-day average.
  • Shell Midstream Partners’ (SHLX) implied volatility was 21.6%—14.4% less than its 15-day average.

In the next part of this series, we’ll look at the movements of midstream stocks with high implied volatilities.

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