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Option Traders: Which OFS Stocks Should Investors Watch?

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Nov. 20 2020, Updated 1:49 p.m. ET

OFS stocks with the highest implied volatilities

On February 21, 2017, Seadrill (SDRL) had the highest implied volatility among OFS (oilfield equipment and services) companies that are part of the VanEck Vectors Oil Services ETF (OIH). Seadrill’s implied volatility was 90.9%—approximately 23.7% below its 15-day average.

Below are the volatilities of other OFS stocks as of February 21:

  • CARBO Ceramics (CRR) – 59.9%, or 2.7% above its 15-day average
  • ENSCO (ESV) – 56.8%, or 2.5% above its 15-day average
  • Noble (NE) – 54.4%, or 4.9% below its 15-day average
  • Weatherford International (WFT) – 49.6%, or 12.3% below its 15-day average

The rise in CARBO Ceramics’ implied volatility compared to its 15-day average is the highest among the five OFS stocks discussed above. CARBO Ceramics announced its 4Q16 earnings results on January 26, 2017. It reported a net loss of $0.28 per share.

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OFS stocks with low implied volatilities

Now, let’s look at oilfield services stocks with low implied volatilities on February 21:

  • Schlumberger’s (SLB) implied volatility was 16.1%, 2.4% less than its 15-day average.
  • Baker Hughes’s (BHI) implied volatility was 22.9%, 1.3% more than its 15-day average.
  • Halliburton’s (HAL) implied volatility was 23%, 1.7% less than its 15-day average.
  • Core Laboratories’ (CLB) implied volatility was 26.2%, 0.6% more than its 15-day average.
  • Helmerich & Payne’s (HP) implied volatility was 28.2%, 1.3% lower than its 15-day average.

Stocks of companies with stronger financial situations generally show lower implied volatility. However, large movements in the stocks can also cause their implied volatilities to rise. In the next part, we’ll look at these stocks in more detail.

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