What Does ConocoPhillips’s Implied Volatility Tell Us?

As of August 24, 2017, ConocoPhillips (COP) had an implied volatility of ~22.2%, which is below its 260-trading day historical price volatility. Since the start of August 2017, COP’s implied volatility has fallen from ~24.2% to ~22.2%.

As of August 24, 2017, Murphy Oil (MUR), Southwestern Energy (SWN), and Consol Energy (CNX) have implied volatilities of ~38.01%, ~33.16%, and ~35.23%, respectively. In the past month, Murphy Oil, Consol Energy, and Southwestern Energy have shown steep falls in their respective implied volatilities.

Based on its implied volatility of ~22.2%, COP stock is expected to close between $46.05 and $40.55 over the next 30 calendar days. This pricing model assumes a bell curve or uniform distribution of stock prices, as well as 360 days in a year and a standard deviation of one. Based on the standard statistical formula, COP’s stock price will stay in this range ~68% of the time. (Remember, implied volatility can’t forecast direction.)

As of August 24, 2017, the SPDR S&P 500 ETF (SPY) has implied volatility of ~8.9%. In August 2017, SPY’s implied volatility has shot up to as high as 21.5%.

ConocoPhillips stock is now trading below its 200-day and 50-day moving averages. On August 24, 2017, the stock price closed at $43.30, while its 200-day and 50-day moving averages stand at $44.09 and $46.48, respectively. This means that COP’s 50-day moving average is below its 200-day moving average, which is technically a bearish sign. COP’s stock price is also oversold as it’s now stretched below its 200-day moving average.