CXO’s implied volatility
Concho Resources’ (CXO) current implied volatility is ~28.5%. In comparison, Concho’s peers Oasis Petroleum (OAS) and Whiting Petroleum (WLL) have high implied volatilities of ~58% and 63%, respectively. The Energy Select Sector SPDR ETF (XLE) has an implied volatility of ~13%.
Implied volatility is an options-model-based estimate of future volatility in a stock. A lower implied volatility means higher expected stability in a stock. It also means investors expect the stock to move less dramatically in either direction than in the case of higher implied volatility, which means a lower implied risk.
In a bullish market, the implied volatility is more likely to fall, while in a bearish market, the implied volatility is more likely to rise.
Implied volatility and stock price range
Based on Concho Resources’ implied volatility and assuming a normal distribution of stock prices with one standard deviation (probability of 68%), Concho Resources stock will likely close between $127.82 and $138.30 in the next seven days.
CXO’s peer Anadarko Petroleum is also expected to release its 3Q17 earnings the same day as CXO. To know more, read What to Expect from Anadarko’s 3Q17 Earnings and Revenue.