Marathon Oil’s implied volatility
On April 13, 2017, Marathon Oil (MRO) had an implied volatility of ~40.2%, ~20.8% lower than its 260-trading-day historical price volatility of ~50.8%.
Marathon Oil’s 30-day stock price forecast
Assuming the normal distribution of prices using the bell curve model and a standard deviation of one, based on its implied volatility of ~40.2%, Marathon Oil’s stock is expected to close between $17.74 and $14.08 after 30 days. Based on the standard statistical formula, Marathon Oil’s stock will stay in this range ~68% of the time.
Other upstream stocks
On April 13, 2017, upstream stocks Denbury Resources (DNR), Diamondback Energy (FANG), and ConocoPhillips (COP) had implied volatilities of ~67.8%, ~31.9%, and ~26.5%, respectively. The SPDR S&P 500 ETF (SPY) has an implied volatility of ~12.7%.
According to the SPDR S&P 500 ETF Trust prospectus, “The Trust seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P 500® Index.”
Implied volatility shows the market’s opinion of a stock’s potential movements, but it doesn’t forecast the direction of these movements. Implied volatility is derived from an option pricing model, meaning that the data are theoretical in nature, and there’s no guarantee these forecasts will be correct.