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Forecasting Anadarko’s Stock Price via Implied Volatility

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Nov. 28 2017, Updated 9:00 a.m. ET

Anadarko’s implied volatility

Anadarko Petroleum’s (APC) implied volatility is 28.5%, which is ~5% lower than its 15-day average of ~30%. In comparison, APC’s peers Concho Resources (CXO) and Apache (APA) have implied volatilities of ~25% and ~32%, respectively.

Implied volatility is an options model–based estimate. It provides information on how a stock could move in the market in a given period. In a bullish market, implied volatility is most likely to fall. In a bullish market, the opposite could be true.

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Forecasting the price range for Anadarko stock

Based on Anadarko Petroleum’s implied volatility of ~28.5% and assuming a normal distribution of stock prices and a standard deviation of one (or a probability of 68%), we can estimate that Anadarko stock could close between $41.58 and $55.30 in the next three months.

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