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Analyzing Shell’s Implied Volatility after Its Q1 Earnings

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Shell’s implied volatility

Royal Dutch Shell (RDS.A) posted its first-quarter earnings on May 2, which beat analysts’ expectations. The stock reacted positively to the news. We’ll discuss how Shell stock could trend in the next eight days ending May 10. We’ll also discuss the changes in Shell’s implied volatility on May 2.

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Shell published its first-quarter earnings on May 2. The implied volatility in Shell fell by 4.0 percentage points compared to the previous day to 20.9%. However, the implied volatility was higher than Shell’s 30-day average implied volatility of 17.8%. On the same day, Shell’s stock price rose 1.6%.

Shell’s stock price forecast

Considering Shell’s implied volatility of 20.9% and assuming a normal distribution of prices and standard deviation of one with a probability of 68.2%, Shell’s stock price could close between $65.7 and $61.7 per share in the next eight days ending May 10.

Peers’ implied volatility

Like Shell, the implied volatility in Suncor Energy (SU) fell by 2.5 percentage points compared to the previous day to 22.4% on May 2. The implied volatility in Equinor (EQNR) and Petrobras (PBR) fell by 0.7 percentage points and 1.0 percentage points, respectively, to 23.8% and 36.8%, respectively, on May 2.

If we consider these companies’ stock prices, then Suncor Energy, Equinor, and Petrobras fell 2.7%, 0.5%, and 0.1%, respectively, on May 2.

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