Analyzing XLU’s Implied Volatility Trends



Implied volatility

On June 21, the Utilities Select Sector SPDR ETF’s (XLU) implied volatility was 13%—close to its 15-day average volatility. In comparison, SPY’s implied volatility was also close to 13%. The implied volatility indicates investors’ nervousness. An increase in the implied volatility is normally associated with a fall in stock prices.

Utility stocks are seen as relatively slow and steady moving. However, their historical long-term implied volatility levels were higher than the broader markets.

XLU iv

Southern Company (SO), NextEra Energy (NEE), and Duke Energy’s (DUK) implied volatility was ~14% at the closing last week. PG&E (PCG) is seeking bankruptcy protection under Chapter 11. PG&E was one of the most volatile stocks among utilities. The company’s implied volatility was ~100%.

NRG Energy (NRG) stock also displayed higher volatility compared to its peers. The stock’s implied volatility was close to 20% at the closing last week. Read NRG Energy Stock: Is There More Weakness Brewing? to learn more.

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