Visa’s implied volatility
Let’s take a look at how Visa (V) stock might perform until its earnings release on April 24. The implied volatility in Visa fell by ~12.5 percentage points from January 2 to 18.73% on April 12. Visa stock has risen ~21% during this period. Visa’s implied volatility is lower than its 15-day average volatility of 20.4%.
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Visa’s price forecast
Based on the closing price of $159.64 on April 12 and assuming a normal distribution of prices, Visa stock might trade in the range of $164.59 to $154.69 in the next 10 days ending April 24. The calculation uses one standard deviation, which means that the stock price is expected to be within this range 68% of the time.
Peers’ implied volatility
Like Visa, the implied volatility in MasterCard (MA), American Express (AXP), and Discover Financial Services (DFS) has fallen since January 2. The implied volatility in MasterCard fell from 34.3% on January 2 to 21.3% on April 12. The implied volatility in American Express fell from 29.2% to 21.1%. The implied volatility in Discover Financial fell from 34.4% to 21.7%.
The fall in the peers’ implied volatility was associated with a rise in their stock prices. MasterCard, American Express, and Discover Financial have risen 27%, 16%, and 29%, respectively, year-to-date.