Previously in this series, we reviewed Chevron’s (CVX) valuation, stock performance, and moving averages. We saw that the stock has risen 13% in the first quarter. The increase has been driven by higher oil prices, better markets, and strong fourth-quarter earnings. In this part, we’ll estimate Chevron’s stock price based on its current implied volatility.
Price range forecast
The implied volatility in Chevron has fallen by 13.7 percentage points since January 2 to the current level of 14.9%. During the same period, Chevron stock has risen 13.2%. The implied volatility in Chevron and it’s stock price have moved in the opposite direction in the first quarter.
Considering Chevron’s implied volatility of 14.9% and assuming a normal distribution of prices or the bell curve model and standard deviation of one with a probability of 68.2%, Chevron’s stock price could close between $129.0 and $121.7 per share in the next 14 calendar days ending on March 29. Currently, the stock trades at $125.3 per share.
Peers’ implied volatility
The implied volatility in Total (TOT) has fallen by 10.9 percentage points on January 2 to the current level of 15.6%. The implied volatilities in PetroChina (PTR) and ENI (E) have fallen by 11.3 percentage points and 7.7 percentage points, respectively, during the same period. Currently, PetroChina and ENI have their implied volatilities at 23.1% and 18.1%, respectively.
If we evaluate the stock prices during the same period, then Total, PetroChina, and ENI’s stock prices have risen 9.5%, 6.9%, and 12.0%, respectively. The implied volatilities in these stocks and their stock prices have moved inversely in the first quarter.
Next, we’ll discuss Chevron’s dividend yield trend.