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What Does SCANA’s Increased Implied Volatility Indicate?

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Implied volatility

Recently, SCANA (SCG) became one of the most volatile stocks in the S&P 500 Utilities Index (XLU). On October 3, 2017, SCANA had an implied volatility of 30%—higher than its 15-day average implied volatility of 23%. It should also be noted that SCANA had an average implied volatility of ~19% this year.

The implied volatility and stock prices are usually inversely related to each other. A higher implied volatility normally represents investors’ unease and is associated with falling stock prices.

In comparison, the Utilities Select Sector SPDR ETF (XLU) has an implied volatility of ~11%—close to its 15-day average implied volatility.

NRG Energy (NRG), the largest independent power producer in the country, is the most volatile stock in the S&P 500 Utilities Index (XLU). On October 3, 2017, it had an implied volatility of 43%.

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