In the previous part, we looked at analysts’ ratings for Marathon Petroleum (MPC). In this part, we’ll review the changes in Marathon Petroleum’s implied volatility. We’ll also estimate Marathon Petroleum’s stock price range for the eight-day period ending on August 4, 2017.
Marathon Petroleum reported its earnings on July 27, 2017. On the day, Marathon Petroleum’s implied volatility fell 3.2% to 22.0%—compared to the previous day. Its implied volatility is lower than the 30-day average implied volatility at 25.3%. On the same day, Marathon Petroleum’s stock price rose 0.9%.
Peers’ implied volatility
Like Marathon Petroleum, the implied volatility in Delek US Holdings (DK) fell 1.1% to 40.2% on July 27—compared to the previous day. However, the implied volatilities in Tesoro (TSO) and HollyFrontier (HFC) rose 0.9% and 1.5%, respectively, to 23.5% and 33.2% on July 27. HollyFrontier’s stock price rose 0.9% on July 27, but Tesoro and Delek US Holdings’ stock prices fell 0.1% and 1.4%, respectively, on the same day.
The SPDR Dow Jones Industrial Average ETF’s (DIA) implied volatility fell 0.6% to 6.5% on July 27. However, the SPDR S&P 500 ETF’s (SPY) implied volatility rose 1.2% to 7.8% on the day. On July 27, DIA rose 0.4%, but SPY fell 0.1%.
Expected price range for Marathon Petroleum stock
Considering Marathon Petroleum’s implied volatility of 22.0% and assuming a normal distribution of prices (bell curve model) and standard deviation of one (with a probability of 68.2%), Marathon Petroleum’s stock price could close between $58.0 and $54.3 per share in the eight-day period after its earnings. The eight-day period ends on August 4.