Southwestern Energy’s implied volatility

On May 21, Southwestern Energy (SWN) had an implied volatility of ~49.7%, lower than its implied volatility of ~62.2% at the end of the first quarter.

Last week, SWN’s implied volatility rose from ~44.3% to ~49.7% due to the ~7% rise in its stock price.

Southwestern Energy’s Possible Trading Range Forecast for Next Week

SWN’s price range forecast

Based on Southwestern Energy’s implied volatility of ~49.7% and assuming a normal distribution of prices, 365 days in a year, and a standard deviation of one, SWN stock is expected to close between $5.06 and $4.40 in the next seven days. SWN should stay in this range 68% of the time. On May 21, the stock closed at $4.73.

Peers’ price range forecasts

On May 21, Range Resources (RRC) had an implied volatility of ~46.3%, which means its stock is expected to close between $17.11 and $15.05 in the next seven days. On May 21, RRC’s stock price closed at $16.08. Like SWN, RRC is primarily a natural gas producer.

On May 21, the First Trust Natural Gas ETF (FCG) had an implied volatility of ~24.4%, which means it’s expected to close between $24.53 and $22.93 in the next seven days. On May 21, FCG closed at $23.73. FCG represents an index of energy stocks that derive a substantial portion of their revenues from the exploration and production of natural gas.

Based on the inputs used in the calculation of price range, there’s a 68% probability that these stocks will close in their ranges in the given period.

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