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What Nabors Industries’ Implied Volatility Suggests

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Nabors Industries’ implied volatility

On February 13, 2017, Nabors Industries (NBR) had an implied volatility of 43%. Since NBR’s 3Q16 financial results were announced on October 25, 2016, its implied volatility has fallen from 50.5% to the current level. NBR makes up 0.25% of the iShares North American Natural Resources ETF (IGE).

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Implied volatility for NBR’s peers

Helmerich & Payne’s (HP) implied volatility on February 13 was ~28%, while Helix Energy Solutions’ (HLX) implied volatility was ~64% on that day. CARBO Ceramics’ (CRR) implied volatility on January 13 was ~59%.

What does implied volatility mean?

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

What does implied volatility suggest for NBR’s price?

Based on Nabors Industries’ implied volatility and assuming normal distribution of stock prices and one standard deviation probability of 68.2%, NBR’s stock will likely close between $16.93 and $15.01 in the next seven days. NBR’s stock price was $15.96 on February 13.

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

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