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.

What Does SCANA’s Increased Implied Volatility Indicate?

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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