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What a Steep Rise in PPL’ s Implied Volatility Could Mean


Mar. 9 2018, Updated 11:35 a.m. ET

Implied volatility

On March 7, 2018, PPL (PPL) stock’s implied volatility reached almost 30%—notably higher than its 15-day average. The implied volatility was also significantly higher than broader utilities’ average. In comparison, the Utilities Select Sector SPDR ETF’s (XLU), which tracks the S&P 500 Utilities Index, implied volatility was close to 16%.

The implied volatility indicates investors’ anxiety. Higher implied volatility is usually associated with a decline in stock prices.

In comparison, Duke Energy’s (DUK) implied volatility was 19%, while Xcel Energy’s (XEL) implied volatility was 21%.

Recently, broader markets’ implied volatility was ~12%.

SCANA (SCG) and NRG Energy (NRG) have been the most volatile stocks among the S&P 500 Utilities Index. On March 7, 2018, SCANA’s implied volatility was 32%, while NRG Energy’s implied volatility was 33%.

For analysts’ favorite stocks from the S&P 500 Utilities Index, read Analyzing Wall Street’s Top 5 S&P 500 Utilities Stocks.

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