Implied volatility

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.

A Look at Southern Company’s Implied Volatility Trends

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.

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