What XLU’s Recent Implied Volatility Trends Indicate



Implied volatility

On February 15, the Utilities Select Sector SPDR ETF’s (XLU) implied volatility was close to 12%—lower than its 15-day average volatility of ~13%. The implied volatility shows investors’ sentiment. Increasing volatility is associated with falling stock prices.

XLU iv

Although utilities are considered slow and steady stocks, their implied volatility has been higher than the S&P 500’s implied volatility. Among utilities, PG&E (PCG) had the highest volatility of ~63%. PG&E’s implied volatility has fallen significantly in the last few weeks. PG&E was close to 200% when the utility filed for bankruptcy late last month.

Top utility stocks including NextEra Energy (NEE) and Duke Energy (DUK) had an implied volatility of close to ~14%, while the S&P 500’s implied volatility was 13%.

To learn about the highest-yielding utilities, read Four Top-Yielding Stocks from S&P 500 Utilities.

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