National Oilwell Varco’s implied volatility in context
On January 18, National Oilwell Varco’s (NOV) implied volatility (or IV) was ~30%. Its 3Q17 earnings were announced on October 26. Since then, its implied volatility has remained nearly unchanged at around this level. Since October 26, NOV’s stock price has increased 12%. During the same period, the Vanguard Energy ETF (VDE) has increased 15%. NOV is 0.89% of VDE.
Since October 26, crude oil’s implied volatility has increased from ~24% to 30%. Implied volatility points to a stock’s potential movement, as viewed by investors. Typically, implied volatility can decrease in a bullish market and increase in a bearish market.
Stock price forecast for National Oilwell Varco
Given National Oilwell Varco’s implied volatility, and assuming a normal distribution of stock prices and one standard deviation probability of 68.2%, NOV’s stock will likely close between $39.49 and $36.33 in the next seven days. NOV’s stock price was $37.91 on January 18.
Implied volatility: Comparison with peers
Helmerich & Payne’s (HP) implied volatility was ~34% on January 18, which implies HP’s stock price can range between $73.33 and $66.73 in the next seven days. Helix Energy Solutions’ (HLX) implied volatility was ~51% on January 18, which implies HLX’s stock price can range between $8.60 and $7.46 in the next seven days. McDermott International’s (MDR) implied volatility was ~43% on January 18, which implies that MDR’s stock price could vary between $8.26 and $7.34 in the next seven days. To compare oilfield services companies’ free cash flow comparison, see Market Realist’s The 5 Worst Oilfield Companies by Free Cash Flow.
Next in this series, we’ll discuss whether investors have shown interest in NOV’s stock, as indicated by its short interest.
The correlation coefficient between National Oilwell Varco’s (NOV) stock price and crude oil price from January 18, 2017, to January 18, 2018, was 0.51. This change represents a strong positive relationship between NOV’s stock and crude oil prices.
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