On March 12, Southern Company (SO) stock exhibited an implied volatility level of 13%, close to its 15-day average. In comparison, the volatility of the Utilities Select Sector SPDR ETF (XLU) was ~12% recently.
Implied volatility indicates investors’ anxiety. Rising volatility is usually associated with falling stock prices.
Southern Company’s implied volatility levels have come down significantly in the last few months. They peaked at close to 30% during the last week of December. The stock has rallied 20% since then.
Peers Duke Energy (DUK) and NextEra Energy (NEE) witnessed volatilities of ~13% recently. Among utilities stocks, PG&E (PCG) stock exhibited the highest implied volatility of 65%, while merchant power stock NRG Energy’s (NRG) implied volatility was 26% recently. SPY’s implied volatility was 11%.
Read about how utilities have been performing recently and where they might go from here in Market Realist’s weekly utilities series.
Let’s take a look at analysts’ views and price targets on Southern Company in the next article.