FTK’s implied volatility in context
On July 3, 2017, Flotek Industries’ (FTK) implied volatility was ~58%. Since its 1Q17 earnings were announced on May 3, 2017, Flotek’s implied volatility has remained unchanged. Remember, IV (implied volatility) mirrors the investors’ views of a stock’s potential movement.
The implied volatility of crude oil was 27.5% on July 3, 2017. In the past three years until July 3, crude oil’s implied volatility was the highest in February 2016 at ~78%.
FTK’s implied volatility, past and present
On December 7, 2016, FTK’s implied volatility rose to 91% on the news of an investigation by a law firm. FTK’s stock price tumbled 15% that day from the previous day’s close.
But FTK’S IV has subsided gradually and is currently marginally higher than its average of 60% over the past three years. In November 2015, FTK’s implied volatility spiked abruptly but then settled down soon thereafter.
Since May 2017, FTK’s implied volatility has increased from ~45% to its current 58%, though crude oil volatility during the same period has actually tapered off.
Stock price forecast for Flotek
Given Flotek Industries’ implied volatility and assuming a normal distribution of stock prices and one standard deviation probability of 68.2%, FTK’s stock will likely close between $9.81 and $8.35 in the next seven days. FTK’s stock price was $9.08 on July 3, 2017.
Notably, FTK makes up 0.07% of the iShares Core S&P Small-Cap ETF (IJR). IJR has remained nearly unchanged since March 31, 2017, compared with FTK’s 30% fall during the same period.
Next, we’ll discuss short interest in FTK stock.