Which Oilfield Services Stocks Have the Highest Implied Volatility?



OFS stocks with high implied volatilities

On January 10, 2017, 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 114.6%, while its 15-day average implied volatility was 135.4%. Its volatility was ~15.4% below its 15-day average.

Previously, Tidewater’s negotiations with lenders and bondholders were extended until November 11, 2016. Now, negotiations have been extended to January 27, 2017. Uncertainty surrounding Tidewater’s debt has kept the stock’s implied volatility elevated.

Below are the volatilities of other OFS stocks as of January 10:

  • Carbo Ceramics (CRR): 79.6%, or 13.3% above its 15-day average
  • Weatherford International (WFT): 77.1%, or 18% above its 15-day average
  • Seadrill (SDRL): 65.5%, or 27.2% below its 15-day average
  • Noble (NE): 64.5%, or 0.7% below its 15-day average

The rise in Weatherford International’s current implied volatility compared to its 15-day average is the highest among the five OFS stocks with the highest implied volatilities. WFT’s implied volatility rose 4.7% on January 9, 2017. On the same day, the stock fell 0.5%.

On January 9, 2017, Barclays reduced its target price on the stock by $1 to $7. On January 4, 2017, Credit Suisse increased its target price on the stock. On January 4, 2017, the stock rose 7.5%.

On January 3, Raymond James reduced its target on Weatherford International to $6 from $6.5. On the same day, the stock rose 7.2%.

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OFS stocks with low implied volatilities

Let’s look at the other oilfield services stocks with low implied volatilities on January 10:

  • Schlumberger’s (SLB) implied volatility was 20.7%, 1% lower than its 15-day average.
  • Halliburton (HAL) implied volatility was 29.6%, 3.6% higher than its 15-day average.
  • Baker Hughes (BHI) implied volatility was 29.8%, 5% lower than its 15-day average.
  • FMC Technologies (FTI) implied volatility was 31.9%, 9.8% higher than its 15-day average.
  • Tenaris (TS) implied volatility was 32.1%, 2.1% lower than its 15-day average.

Companies with stronger financial situations generally show lower implied volatility. But large movements in stocks can also cause their implied volatilities to rise.

In the next part, we’ll look at these stocks’ returns.


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