Weatherford International’ implied volatility
On September 12, Weatherford International’s (WFT) implied volatility was 49.3%. Since its 2Q17 financial results were declared on July 28, WFT’s implied volatility (or IV) has fallen from ~62% to the current level. Implied volatility (or IV) signals a stock’s potential price movement as viewed by options traders.
WFT’s IV was near its two-year high in January 2016, when it reached 118%. Since then, it has subsided gradually. WFT is 4.5% of the SPDR S&P Oil & Gas Equipment & Services ETF (XES). XES fell 13% in the past year versus a 33% fall in WFT’s stock price. Learn more about WFT in Market Realist’s What’s Keeping Weatherford Down despite Margin Improvement?
Crude oil’s implied volatility
Since July 28, crude oil’s implied volatility has fallen from 29% to ~27%. In May, crude oil’s implied volatility was at its highest (~33%) in 2017 so far.
Implied volatility for WFT’s peers
Precision Drilling Corporation’s (PDS) implied volatility on September 12 was 59%, so PDS’s stock price could vary between $3.08 and $2.62 in the next seven days. Halliburton’s (HAL) implied volatility was ~22% on September 12. So HAL’s stock price could vary between $43.07 and $40.49 in the next seven days. CARBO Ceramics’ (CRR) implied volatility on September 12 was ~29%, which implies CRR’s stock price could vary between $8.49 and $7.03 in the next seven days.
The energy sector makes up 5.7% of the S&P 500 Index (SPX-INDEX). The SPX-INDEX rose 17% in the past year. Read more about top oilfield service companies’ performance in Market Realist’s SLB, HAL, NOV, WFT: How They Stack Up after 2Q17.
Seven-day stock price forecast for Weatherford
Based on Weatherford International’s implied volatility and assuming a normal distribution of stock prices and one standard-deviation probability of 68.2%, WFT’s stock will likely close between $4.48 and $3.90 in the next seven days. WFT’s stock price was $4.19 on June 12.
In the next part of this series, we’ll discuss WFT’s correlation with crude oil prices.