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Shell Stock: 1-Week Forecast after 1Q18 Earnings

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Implied volatility in Shell

In this post-earnings release series, we’ve looked at analyst ratings for Royal Dutch Shell (RDS.A). In this part, we’ll look at changes in Shell’s implied volatility. We’ll also estimate Shell’s stock price range for the eight-day period ending on May 4.

Royal Dutch Shell (RDS.A) published its earnings results on April 26. That day, implied volatility in Shell fell by two percentage points from the previous day to 17.8%. This level was lower than Shell’s 30-day average implied volatility of 19.1%. On April 26, Shell’s stock price fell 1.1%.

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Expected price range for Shell stock up to May 4

Considering Shell’s implied volatility of 17.8%, and assuming a normal distribution of prices (the bell curve model) and a standard deviation of one (with a probability of 68.2%), Shell’s stock price could close between $72.2 and $68.4 per share in the eight-day period ending on May 4.

Peers’ implied volatility

Like Shell, implied volatility in PetroChina (PTR) fell by 1.1 percentage points from the previous day to 24.1% on April 26. Implied volatility in Petrobras (PBR) and Total (TOT) decreased by 4.0 percentage points and 0.1 percentage points, respectively, to 37.3% and 17.4%. PTR, PBR, and TOT rose 0.4%, 4.1%, and 1.5%, respectively.

Implied volatility in the SPDR Dow Jones Industrial Average ETF (DIA) fell by 0.9 percentage points from the previous day to 14.4% on April 26. Also, the SPDR S&P 500 ETF (SPY) saw a fall in its implied volatility by 1.4 percentage points to 13.1%. DIA and SPY rose by 1% each.

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