uploads///ECA Q Post Implied Volatility

Encana’s Stock Price Forecast: Implied Volatility


Feb. 23 2017, Updated 3:37 p.m. ET

Encana’s implied volatility

As of February 17, 2017, Encana (ECA) had an implied volatility of ~41.16%, which is ~36.25% below its 260-trading day historical price volatility of ~64.56%.

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Stock price range forecast

Assuming normal distribution of prices (a bell curve model) and standard deviation of one, based on its implied volatility of ~41.16%, Encana’s stock is expected to close between $13.81 and $10.89 after 30 calendar days. Based on the standard statistical formula, Encana’s stock will stay in this range ~68% of the time.

Other upstream stocks

As of February 17, 2017, other upstream stocks like California Resources (CRC), ConocoPhillips (COP), and Murphy Oil (MUR) have implied volatilities of ~74.54%, ~26.30%, and ~35.88%. The SPDR S&P 500 ETF (SPY) (SPX-INDEX) has implied volatility of ~10.53%.

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


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