NRG Energy’s Volatility Trends



Implied volatility

NRG Energy (NRG) stock is among the most volatile stocks in the S&P 500 Utilities. On September 25, NRG Energy had an implied volatility of 24%—well below its 15-day average. In comparison, the Utilities Select Sector SDPR ETF’s (XLU) implied volatility was close to 13%. A stock’s implied volatility represents investors’ unease. Rising volatility is generally related to a fall in a stock’s price. The current volatility in NRG Energy stock has fallen. The stock even witnessed volatility levels close to 50% early this year.

NRG iv

Recently, the implied volatilities of top utility stocks including Southern Company (SO) and NextEra Energy (NEE) were ~14% each. SPY is making all-time highs. SPY’s implied volatility levels are touching levels below 8%—some of the lowest levels this year.

Utilities continue to offer relatively attractive dividend yields compared to broader markets. Many utility stocks offer higher yields than the sector average. Read Do You Own Any of These Top-Yielding S&P 500 Utilities Stocks? to learn more.

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