What XLU’s Implied Volatility Trends Suggest

On October 5, the Utilities Select Sector SPDR ETF (XLU) witnessed an implied volatility of 22%—way higher than its 15-day average of 14%. Recently, the SPDR S&P 500’s implied volatility was beyond 11%. The implied volatility represents investors’ anxiety. An increase in the volatility is usually related to a fall in stock prices.

Top utility stocks Duke Energy (DUK) and NextEra Energy (NEE) exhibited volatility around 16%. At the same time, the volatility of Dominion Energy (D) and Southern Company (SO) stocks had volatility around 17% and 19%.

Among the utilities, PG&E (PCG) stock had the highest implied volatility at ~35%. NRG Energy’s (NRG) volatility is close to 33%. NRG Energy is one of the smallest constituents of XLU.

To learn how the biggest utility stocks are positioned going forward, read How the Big Utilities Are Placed for the Future.