Devon Energy’s Stock Price Forecast Using Implied Volatility



Devon Energy’s implied volatility

As of February 16, 2017, Devon Energy (DVN) had an implied volatility of ~32.3%, which is ~36.3% below its 260-day historical price volatility of ~50.6%.

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Stock price range forecast

Assuming normal distribution of prices (bell curve model) and standard deviation of one, based on its implied volatility of ~32.3%, Devon Energy’s stock is expected to close between $48.19 and $40.03 after 30 calendar days. Based on the standard statistical formula, Devon Energy’s stock will stay in this range ~68% of the time.

Other upstream stocks

As of February 16, 2017, other upstream stocks like California Resources (CRC), ConocoPhillips (COP), and Murphy Oil (MUR) have implied volatilities of ~78.0%, ~26.3%, and ~36.2%, respectively. The SPDR S&P 500 ETF (SPY) (SPX-INDEX) has an implied volatility of ~10.5%.

Implied volatility shows the market’s opinion of the stock’s potential moves, but it doesn’t forecast direction. Implied volatility is derived from option pricing model. This means the data is theoretical in nature and there is no guarantee these forecasts will be correct.


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