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Understanding Weatherford’s 7-Day Stock Price Forecast as of September 8

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Weatherford’s implied volatility

On September 8, 2017, Weatherford International’s (WFT) IV (implied volatility) was 54.3%. WFT’s 2Q17 financial results were announced on July 28.

Since July 28, 2017, Weatherford’s IV has fallen from 62% to its current level. Notably, WFT makes up 4.5% of the SPDR S&P Oil & Gas Equipment & Services ETF (XES), which has fallen 19% in the past year, compared with the 31% fall in WFT’s stock price during the same period.

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Weatherford’s 7-day stock price forecast

WFT’s stock will likely close between $4.28 and $3.68 in the next seven days. This estimate is based on Weatherford International’s IV, assuming a normal distribution of stock prices and one standard deviation probability of 68.2%. WFT’s stock price was $3.98 on September 8, 2017.

Implied volatility for WFT’s peers on September 8

IV signals a stock’s potential price movement as viewed by options traders. National Oilwell Varco’s (NOV) IV on September 8 was 25.5%, which implies that NOV’s price could vary between $32.87 and $30.63 over the next seven days. CARBO Ceramics’ (CRR) IV was ~66% on September 8, which implies that CRR stock could vary between $7.60 and $6.32 over the next seven days.

Crude oil’s implied volatility

On September 8, 2017, crude oil’s implied volatility was 26.9%. Since June 30, 2017, WFT’s IV has fallen sharply from ~81% to ~54% now. During the same period, crude oil’s implied volatility has changed marginally. The S&P 500 Index (SPX-INDEX) has risen 16% in the past year.

Notably, the energy sector accounts for 6.0% of SPX-INDEX.

In the next and final part, we’ll discuss Weatherford’s correlation with the price of crude oil.

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