Halliburton’s implied volatility
On April 7, 2016, Halliburton’s (HAL) implied volatility was ~29%. Since HAL’s 4Q16 financial results were announced on January 23, 2017, its implied volatility has increased from ~24% to its current level.
7-day stock price forecast for Halliburton
Based on Halliburton’s implied volatility and assuming normal distribution of stock prices and a 1 standard deviation probability of 68.2%, HAL stock could close between $47.67–$51.69 in the next seven days. HAL’s stock price was $49.68 on April 7, 2017.
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 an implied volatility suggested price can be uncertain.
Implied volatility for HAL’s peers
Flotek Industries’s (FTK) implied volatility on April 7 was ~56%, while Helix Energy Solutions Group’s (HLX) implied volatility was ~57% on that day. Helmerich & Payne’s (HP) implied volatility on April 7 was ~30%.
Energy stocks are typically correlated with crude oil prices. Has HAL’s correlation with crude oil prices increased? Let’s find out in the next part of this series.