18 Mar

Analyzing XLU’s Implied Volatility Trends

WRITTEN BY Vincent Kruger

Implied volatility

On March 15, the Utilities Select Sector SPDR (XLU) had an implied volatility of 10.5%—lower than its 15-day average. In comparison, SPY’s implied volatility was close to 10%. The implied volatility indicates investors’ anxiety. A rise in the implied volatility is generally associated with a fall in stock prices. Currently, XLU’s implied volatility is at the lowest levels this year, which could suggest investors’ confidence.

Analyzing XLU’s Implied Volatility Trends

Interestingly, utility stocks are seen as relatively slow and stable, but their historical long-term implied volatility levels were higher than broader markets.

Among the top utilities, Duke Energy (DUK) and Southern Company (SO) had a volatility of close to 12% last week. PG&E (PCG) stock had the highest implied volatility levels of 61%, while NRG Energy (NRG) had an implied volatility of ~25% recently.

To learn how Southern Company stock played out and how it’s placed compared to its peers, read What Southern Company’s Indicators Suggest as Stock Peaks.

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