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OXY’s Stock Price Forecast Using Implied Volatility

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Occidental Petroleum’s implied volatility

On February 13, 2017, Occidental Petroleum (OXY) had an implied volatility of ~20.2%, ~12.2% below its 260-trading-day historical price volatility of ~23.0%.

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Stock price range forecast

Assuming a normal distribution of prices using the bell curve model and a standard deviation of one, based on its implied volatility of ~20.2%, Occidental Petroleum’s stock is expected to close between $71.30 and $63.48 after 30 days. Based on the standard statistical formula, Occidental Petroleum’s stock will stay in this range ~68% of the time.

Other upstream stocks

On February 13, 2017, upstream stocks California Resources (CRC), ConocoPhillips (COP), and Murphy Oil (MUR) had implied volatilities of ~78.9%, ~26.8%, and ~37.1%, respectively. The SPDR S&P 500 ETF (SPY) (SPX-INDEX) had an implied volatility of ~10.7%.

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

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