Estimated price range for Shell stock for the 15-day period ending March 30
In this part of our series, we’ll look at Royal Dutch Shell’s (RDS.A) stock price estimate based on its current implied volatility. Usually, higher implied volatility implies that the stock is expected to provide higher positive or negative returns.
Implied volatility in Royal Dutch Shell (RDS.A) has risen 2.7% over January 2 to the current level of 16.4%. During the same period, Shell stock fell 9.0%.
Considering Shell’s implied volatility of 16.4% and assuming a normal distribution of prices (the bell curve model) and a standard deviation of one (with a probability of 68.2%), Shell stock price could close between $63.9 and $59.8 per share in the next 15 calendar days, ending March 30.
Implied volatilities in peers
Implied volatility in PetroChina (PTR) has risen 7.4% over January 2 to 28.6%. Also, implied volatilities in YPF (YPF) and Suncor Energy (SU) have risen 1.8% and 4.8%, respectively. Currently, YPF and SU’s implied volatilities stand at 27.6% and 21.8%, respectively. Considering stock performances since January 2, we see that PTR stock declined 5.2%. In the same period, YPF and SU stocks also fell 8.5% and 13.7%, respectively.
Also, the SPDR Dow Jones Industrial Average ETF (DIA) and the SPDR S&P 500 ETF’s (SPY), the broader market indicators, have shown rises in their implied volatilities. Implied volatilities in DIA and SPY rose 6.4% and 3.9%, respectively. Implied volatilities in DIA and SPY currently stand at 14.7% and 11.5%, respectively. Since January 2, DIA and SPY’s values rose 0.4% and 2.3%, respectively.
In the next part of this series, we’ll review Shell’s dividend payment estimates for the next quarter.