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Where Could XOM, CVX, RDS.A, and BP Stocks Be by December 31?

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Oct. 1 2018, Updated 3:10 p.m. ET

Implied volatility in integrated energy stocks

Implied volatilities in integrated energy stocks fell in the third quarter of 2018. Chevron (CVX) saw the highest fall in its implied volatility compared to peers BP (BP), ExxonMobil (XOM), and Royal Dutch Shell (RDS.A).

Implied volatilities in CVX and BP fell 5.4 percentage points and 4.4 percentage points, respectively, on July 2 to 16.5% and 18.1%, respectively, on September 28. XOM and Shell fell 3.6 percentage points and 2.4 percentage points, respectively, in their implied volatilities on July 2. On September 28, implied volatilities in XOM and Shell were 15.3% and 17.2%, respectively.

BP was the highest among Shell, XOM, and CVX for absolute implied volatility. In the stated period, BP stock rose 2%, and XOM rose 4%. CVX and Shell fell 1.6% and 0.4%, respectively.

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Forecast price range for integrated energy stocks by year-end

Considering integrated energy stocks’ current implied volatilities and assuming a normal distribution of prices (bell curve model) and a standard deviation of one (with a probability of 68.2%), integrated energy stocks could end within their upper and lower price limits in the fourth quarter, which will end on December 31.

According to the above chart, we can infer that BP stock could have the most significant percentage gain or loss in the fourth quarter. It could close between $50.30 and $41.90 per share. XOM could have the smallest gain or loss and could close between $91.50 and $78.50 per share. CVX could close between $132.30 and $112.20 per share, and Shell could close between $74 and $62.30 per share.

In the next part, we’ll look at the dividend yields of these integrated energy stocks.

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