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Here’s What We Can Expect for Halliburton Next Week

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Halliburton’s implied volatility

On March 13, 2017, Halliburton’s (HAL) implied volatility was ~23%. Since HAL’s 4Q16 financial results were announced on January 23, its implied volatility fell from ~25% to its current level. HAL makes up 0.13% of the iShares MSCI ACWI Low Carbon Target ETF (CRBN). The energy sector makes up 5.6% of CRBN.

On March 6, Halliburton’s chief financial officer (or CFO), Mark McCollum, departed to join Weatherford International (WFT) as its new CFO. Following the news, HAL’s implied volatility went up to 25.5% on March 8.

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What does implied volatility mean?

Implied volatility (or IV) reflects investors’ views of a stock’s potential movement. However, IV doesn’t forecast direction. Implied volatility is derived from an option pricing model. Investors should note that the accuracy of prices based on implied volatility is uncertain. CARBO Ceramics’ (CRR) implied volatility on March 13 was ~61%, while Helmerich & Payne’s (HP) implied volatility that day was ~28%. Precision Drilling’s (PDS) implied volatility on March 13 was ~52%.

Forecast for Halliburton

Based on Halliburton’s implied volatility and assuming normal distribution of stock prices and one standard deviation probability of 68.2%, NOV’s stock will likely close between $52.54 and $49.22 in the next seven days. HAL’s stock price was $50.88 on March 13, 2017.

Energy stocks are typically correlated with crude oil prices. Has HAL’s correlation with crude oil price increased? We’ll answer this question in the following part of the series.

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