On March 12, implied volatility in Southern Company (SO) stock was 17%—marginally lower than its 15-day average.
Implied volatility signifies investors’ nervousness. Higher volatility is usually associated with a fall in stock prices.
In comparison, implied volatility in the Utilities Select Sector SPDR ETF (XLU), which tracks the S&P 500 Utilities Index, was around 14%. Implied volatility in broader markets (SPY) was close to 11%.
Utilities are commonly seen as safe, mainly due to their stable stock price movements. However, implied volatility in utilities was notably higher than in the broader markets recently.
For analysts’ favorite utilities, see Market Realist’s series Analyzing Wall Street’s Top 5 S&P 500 Utilities Stocks.