So far in this pre-earnings series, we have looked at Royal Dutch Shell’s (RDS.A) earnings estimate, segmental outlook, stock price performance, and its moving average trend. Now, we’ll look at Shell’s stock price forecast range, based on its implied volatility, until its earnings. Shell is expected to post its 2Q17 earnings on July 27, 2017.
Implied volatility in Shell and peers
Implied volatility in Shell has fallen from 17.4% on April 3, 2017, to the current level of 15.7%. During the same period, Shell stock rose 1.7%.
Similarly, implied volatility in ExxonMobil (XOM) has fallen 0.1% over April 3 to 14.8%. Also, implied volatility in Total (TOT) and Petrobras (PBR) fell 1.1% and 5.0%, respectively, in the same period. TOT and PBR’s implied volatilities currently stand at 16.6% and 36.1%, respectively. However, implied volatilities in Chevron (CVX) and BP (BP) have risen 0.3% and 3.1% to their current levels of 15.8% and 18.0%, respectively.
The SPDR Dow Jones Industrial Average ETF (DIA) and the SPDR S&P 500 ETF (SPY) also saw falling implied volatilities, which have dipped 2.4% and 3.6%, respectively, since April 3. The implied volatilities for DIA and SPY currently stand at 7.2% and 7.1%, respectively.
Expected price range for Shell stock until July 27
Considering Shell’s implied volatility of 15.7% and assuming a normal distribution of prices, a standard deviation of 1, and a probability of 68.2%, Shell’s stock price could close between $52.20 and $55.00 in the ten-day period ending July 27, 2017.
In the final part of this series, we’ll review where analyst ratings for Shell stand pre-earnings.