What Does Flotek Industries’ Implied Volatility Suggest?



Flotek Industries’ implied volatility

On January 13, 2017, Flotek Industries (FTK) had an implied volatility of 81%. Since FTK’s 3Q16 financial results were announced on November 2, 2016, its implied volatility has risen from 67% to the current level. FTK makes up 0.14% of the iShares Micro-Cap ETF (IWC).

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Implied volatility for FTK’s peers

Helmerich & Payne’s (HP) implied volatility on January 13 was ~33%, while Helix Energy Solutions’ (HLX) implied volatility was ~57% on that day. CARBO Ceramics’ (CRR) implied volatility on January 13 was ~79%.

What does implied volatility mean?

Implied volatility (or IV) reflects investors’ views of a stock’s potential movement. However, IV doesn’t forecast direction. Implied volatility is derived from an option pricing model. Investors should note that suggested prices based on implied volatility can be uncertain.

On December 7, 2016, FTK’s implied volatility shot up after the news of an investigation by a law firm. The investigation related to potential securities laws violations by FTK in connection with certain previous financial statements. FTK’s stock price tumbled 15% on December 7 compared to the previous day’s close.

Next, we’ll discuss investors’ short interest in Flotek Industries.


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