On October 22, Southern Company (SO) stock witnessed an implied volatility of 20.0%—close to its 15-day average. In comparison, the Utilities Select Sector SPDR ETF’s (XLU) volatility was ~15.0%. The implied volatility shows investors’ nervousness. Higher volatility is usually associated with a fall in a stock’s price.
Recently, the SPDR S&P 500 Trust ETF (SPY) had an implied volatility of 16.0%. Typically, utilities are seen as a safe and slow-moving sector. Broader markets seem more anxious amid increasing geopolitical tensions. The implied volatility touched one of the highest levels in 2018.
Utilities were one of the favored sectors amid the market rout. To learn how utilities performed last week and where they might go from here, read Last Week in Utilities: How These Defensives Played Out.