ConocoPhillips’s implied volatility
As of March 23, ConocoPhillips (COP) had an implied volatility of ~28.5%, which is higher than its implied volatility of ~21.0% on December 29, 2017. In last five trading sessions, COP’s implied volatility increased from ~21.8% to ~28.5%, due to a strong rise of ~5% in the stock price.
COP’s price range forecast
Based on ConocoPhillips’s implied volatility of ~28.5%—and assuming a normal distribution of prices, 365 days in a year, and a standard deviation of one—the stock could close between $60.01 and $55.47 in the next seven calendar days. COP’s stock should stay in this range 68% of the time. On March 23, COP’s stock price closed at $57.74.
Peers’ price range forecasts
As of March 23, COP’s peer Marathon Oil (MRO) had an implied volatility of ~41.09%, which means MRO stock is expected to close between $16.66 and $14.86 in the next seven calendar days. On March 23, MRO’s stock price closed at $15.76. Like COP, MRO operates internationally as well as in the United States. However, both COP and MRO are focusing more on unconventional resources in the United States.
As of March 23, the SPDR S&P Oil and Gas Exploration & Production ETF (XOP) had an implied volatility of ~31.61%, which means XOP is expected to close between $36.22 and $33.18 in the next seven calendar days. On March 23, XOP’s price closed at $34.70. XOP represents an index of stocks across the energy industry. XOP has ~79% exposure to the oil and gas exploration and production industry. Based on the inputs used to calculate the price range, there’s a 68% chance these stocks will close in their range for the given period.