EQT: Analyzing Implied Volatility and Price Forecasts

On May 29, EQT’s (EQT) implied volatility was 40.5%, which is ~1.5% higher than its 15-day average. On the same day, Range Resources (RRC) and Antero Resources (AR) had implied volatilities of 54.9% and 54.8%, respectively.

On May 29–June 5, EQT should close between $17.99 and $19.77 68.0% of the time. The forecast is based on EQT’s implied volatility of 40.5% and assumes a normal distribution of prices. On May 29, EQT closed at $18.88.

On May 22, EQT’s stock price fell below its 50-day moving average after staying above it for the last 13 trading sessions. On the same day, natural gas prices fell 2.7%.

EQT’s 100-day moving average of $20 will likely be the next important support level for its stock. The price level is close to the upper limit of our forecast. On May 28, EQT stock closed 8.2%, 8.5%, 5.7%, and 11.4% below its 20-day, 50-day, 100-day, and 200-day moving averages, respectively. Prices falling below these key moving averages indicates weakness in the stock. Weakness in natural gas prices could be behind the recent fall in EQT’s stock prices.

On May 28, EQT’s 50-day moving average was 3.1% below its 200-day moving average. On the same day, natural gas’s 50-day moving average was 14.8% lower than its 200-day moving average. In the last quarter, EQT operated with a production mix of ~95% in natural gas.

In technical terms, the crossover is called a “death cross.” Usually, a death cross is followed by weakness in prices. On August 28, EQT’s 50-day moving average decisively broke below its 200-day moving average. Since August 28, EQT’s stock prices fell 30.66%