Here’s What We Can Forecast for National Oilwell Varco Next Week

Alex Chamberlin - Author

Mar. 10 2017, Updated 9:06 a.m. ET

Forecast for National Oilwell Varco

Based on National Oilwell Varco’s (NOV) implied volatility and assuming normal distribution of stock prices and one standard deviation probability of 68.2%, NOV stock will likely close between $40.92 and $37.68 in the next seven days. NOV stock was $39.30 on March 7, 2017, and its implied volatility was ~30.0%.

Since NOV announced its 4Q16 financial results on February 6, 2017, its implied volatility has fallen from ~35.0% to the current level. NOV makes up 0.08% of the iShares MSCI ACWI Low Carbon Target (CRBN). The energy sector makes up 5.7% of CRBN.

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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. It’s derived from an option pricing model. You should note that the correctness of IV suggested prices can be uncertain.

Implied volatility for NOV’s peers

Carbo Ceramics’ (CRR) volatility on March 7, 2017, was ~56.0%. Helmerich & Payne’s (HP) implied volatility that day was 28.8%. Precision Drilling’s (PDS) implied volatility was 49.0%.

Energy stocks are typically correlated with crude oil prices. In the next part, we’ll see if NOV’s correlation with the price of crude oil has risen.


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