Halliburton’s implied volatility
Halliburton’s (HAL) implied volatility was ~31% on March 29, 2018. On January 22, 2018, the day Halliburton released its 4Q17 earnings, its implied volatility was 23%. Since then, Halliburton’s implied volatility has increased. HAL makes up 3.5% of the SPDR S&P Oil & Gas Equipment & Services ETF (XES). XES provides exposure to the oil and gas equipment and services segment of the energy sector. XES has fallen 23% since January 22 versus a 17% fall in HAL’s stock price during the same period. Implied volatility (or IV) signals a stock’s potential price movement, as viewed by the option holders.
Halliburton’s seven-day stock price forecast
Halliburton’s stock will likely close between $48.95 and $44.93 in the next seven days based on its implied volatility. Halliburton’s seven-day stock price forecast is based on normal distribution of stock prices and one standard deviation probability of 68.2%. HAL’s stock price was $46.94 on March 29.
Implied volatility for HAL’s peers
TechnipFMC’s (FTI) implied volatility on March 29 was 36.4%, which implies FTI’s stock price can vary between $30.94 and $27.96 in the next seven days. McDermott International’s (MDR) implied volatility was 58% on March 29, which implies MDR’s stock price could range between $6.58 and $5.60 in the next seven days. Weatherford International’s (WFT) implied volatility was ~74% on March 29, which implies WFT’s stock price can vary between $2.53 and $2.05 in the next seven days.
Crude oil’s implied volatility
On March 29, crude oil’s implied volatility was 22.5%. Since January 22, 2018, crude oil’s volatility has increased, while HAL’s implied volatility also increased during the same period.
Next, we will discuss crude oil’s correlation with HAL.