OFS stocks with high implied volatilities
As of March 21, 2017, Tidewater (TDW) has fallen 86.3% over the past year. TDW has the highest implied volatility of all the OFS (oilfield equipment and services) constituents of the VanEck Vectors Oil Services ETF (OIH). In the past five trading days, Tidewater stock has risen 15.9%—the highest rise among high implied volatility companies.
In the past five trading days, OIH has risen 0.5%, while the S&P 500 Index (SPY) (QQQ) (SPX-INDEX) has fallen 0.9%. The Dow Jones Industrial Average (DIA) (DJIA-INDEX) has fallen 0.9%, and the technology-heavy NASDAQ Composite (COMP-INDEX) (QQQ) has fallen 1.1% during the past five days.
The above table shows the one-year and five-day returns of the stocks we have identified as having high and low implied volatilities. Generally speaking, the high implied volatility stocks have fallen significantly or have moved more drastically than the low implied volatility stocks. In the past five days, Tidewater showed the steepest rise among the OFS stocks with high implied volatilities, while Noble (NE) lost the most during this period.
TDW and WFT
On March 14, 2017, Tidewater announced that its lenders had granted it an extension of previously given waivers up to March 27, 2017. Since March 14, 2017, the stock has gained 16.5%.
Tidewater has also fallen the most in the past year. In the past four quarters, Tidewater’s revenue has fallen 40.7%, and its adjusted operating loss was $39.7 million in 4Q16, as compared to $0.10 million in 4Q15. Its operating profit margin is at -18.3%.
Weatherford International (WFT) has fallen the least in the past year among our group of high implied volatility OFS stocks. In the past four quarters, WFT’s revenue has fallen 30.1%. Its operating loss was $148.0 million in 4Q16, as compared to its operating loss of $388.0 million in 4Q15. Its operating profit margin is at -12.5%, as compared to the industry median of -3.7%.
Returns of OFS stocks with low implied volatilities
Baker Hughes‘ (BHI) shares rose the most in the past five days among the low implied volatility OFS stocks. In the past four quarters, Baker Hughes revenue has fallen 29%, but its adjusted operating income has fallen a significant 91%. BHI’s operating profit margin is at -13.5%.
Remember, sharp moves and high short interest can cause high implied volatility in a stock. In the next and final part of this series, we’ll look at the OFS stocks with the highest short-interest-to-equity float ratios.