Weatherford International’s implied volatility
On December 26, 2017, Weatherford International’s (WFT) IV (implied volatility) was ~54%. Since its 3Q17 financial results were declared on November 1, 2017, its IV has remained nearly unchanged at the current level. IV signals a stock’s potential price movement as viewed by option traders.
WFT’s IV was near its two-year high in January 2016 when it reached 118%. Since then, it has fallen gradually. WFT makes up 3.6% of the SPDR S&P Oil & Gas Equipment & Services ETF (XES). XES has fallen 25% in the past year compared to a 20% fall in WFT stock.
Implied volatility for WFT’s peers
Halliburton’s (HAL) implied volatility on December 26, 2017, was 25%, so HAL stock could vary between $50.46 and $47.08 in the next seven days. Helix Energy Solutions’ (HLX) implied volatility was ~53% on December 26. So HLX stock could vary between $8.19 and $7.13 in the next seven days. Carbo Ceramics’ (CRR) implied volatility on December 26 was 67%, which implies that CRR stock could vary between $11.60 and $9.64 in the next seven days.
The energy sector makes up 5.8% of the S&P 500 Index (SPX-INDEX), which has risen 18% in the past year. You can read more on top oilfield services companies’ performances in Market Realist’s Which Oilfield Service Stocks Look Attractive in 4Q17?
Weatherford’s 7-day stock price forecast
Based on Weatherford International’s implied volatility and assuming a normal distribution of stock prices and one standard deviation probability of 68.2%, WFT stock could likely close between $4.33 and $3.73 in the next seven days. WFT stock was trading at $4.03 on December 26, 2017.
In the next part, we’ll look at WFT’s correlation with the price of crude oil.