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ExxonMobil Stock Plunges: Where Will It Be by June 29?

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Mar. 29 2018, Updated 6:33 a.m. ET

Forecast price range for XOM for the 95-day period ending June 29

Implied volatility in ExxonMobil (XOM) has risen 5.9% since January 2, 2018, to its current level of 18.8%. During the same period, ExxonMobil stock has fallen 13.0%.

Volatility estimates stock return changes during a particular period of time. Implied volatility is the estimated future volatility of a security derived from an option pricing model. High implied volatility indicates that a stock’s price is expected to move sharply and thus provide higher positive or negative returns. Conversely, low implied volatility indicates that lower positive or negative returns can be expected for a given period.

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Considering ExxonMobil’s implied volatility of 18.8% and assuming a normal distribution of prices using the bell curve model and a standard deviation of one (with a probability of 68.2%), ExxonMobil’s stock price could close between $81.1 and $66.9 per share in the next 95 calendar days ending on June 29, 2018.

Peers’ implied volatilities

Total’s (TOT) implied volatility has risen 2.7% since January 2, 2018, to 16.8%. The implied volatilities of Petrobras (PBR) and PetroChina (PTR) have risen 9.6% and 5.4%, respectively, in the same period. Currently, PBR and PTR have implied volatilities of 39.9% and 27.7%, respectively. Total’s stock price has risen 3% since January 2. PBR has risen sharply by 35% in the same period. However, PTR has fallen 2% since January 2.

The implied volatilities of the SPDR Dow Jones Industrial Average ETF (DIA) and the SPDR S&P 500 ETF (SPY), the broader market indicators, have risen. DIA’s implied volatility has risen 10.3%, and SPY’s has risen 9.5% since January 2. However, in the same period, DIA and SPY have witnessed 2.5% and 1.4% falls in their values, respectively. DIA and SPY currently have implied volatilities of 18.8% and 16.4%, respectively.

In the next article, we’ll review the trend in ExxonMobil’s dividend yield.

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