Weatherford’s implied volatility
On October 27, Weatherford International’s (WFT) implied volatility (or IV) was ~72%. WFT released its 2Q17 financial results on July 28. Since July 28, Weatherford’s IV has risen from 62% to the current level. Since July 28, WFT’s stock price fell 23%. WFT is 2.7% of the SPDR S&P Oil & Gas Equipment & Services ETF (XES). XES fell 4% since July 28.
Weatherford’s seven-day stock price forecast
WFT’s stock will likely close between $3.59 and $2.95 in the next seven days. The 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 $3.27 on October 27.
Implied volatility for WFT’s peers on October 27
Implied volatility (or IV) directs a stock’s potential price movement, as viewed by options traders. McDermott International’s (MDR) implied volatility on October 27 was 38%, which implies that MDR’s price could vary between $6.83 and $6.15 in the next seven days. TechnipFMC’s (FTI) implied volatility was 28% on October 27. TechnipFMC’s stock price could vary between $27.59 and $25.55 in the next seven days. Read more about FTI in Market Realist’s TechnipFMC: What Worked and What Did Not in 3Q17.
Crude oil’s implied volatility
On October 27, crude oil’s implied volatility was 23.5%. Since June 30, WFT’s implied volatility has fallen from ~81% to ~72%. During the same period, implied volatility for crude oil has fallen from 27% to the current level. The S&P 500 Index (SPX-INDEX) rose 7% since June 30. The energy sector accounts for 6.0% of the S&P 500 Index.
Next, we’ll discuss Weatherford’s correlation with crude oil prices.