Investors in DXC Technology Company DXC need to pay close attention to the stock based on moves in the options market lately. That is because the Aug. 15, 2025 $7.00 Call had some of the highest implied volatility of all equity options today.
What is Implied Volatility?
Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.
What do the Analysts Think?
Clearly, options traders are pricing in a big move for DXC Technology shares, but what is the fundamental picture for the company? Currently, DXC Technology is a Zacks Rank #2 (Buy) in the Computers - IT Services industry that ranks in the Bottom 37% of our Zacks Industry Rank. Over the last 60 days, one analyst has increased the earnings estimate for the to-be-reported quarter, while none have dropped their estimates. The net effect has taken our Zacks Consensus Estimate for the to-be-reported quarter from 63 cents per share to 64 cents in that period.
Given the way analysts feel about DXC Technology right now, this huge implied volatility could mean there’s a trade developing. Oftentimes, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
