LNKD Analysis

The work-oriented social networking company LinkedIn Corp. (LNKD), headquartered in Mountain View, California, broke above its 20-day price channel on Thursday.

It was the seventh bull signal from LNKD in the past  year. Only a third of the six completed signals produced a profit.

[LNKD in Wikipedia]

LNKD

I shall use the OCT series of options, which trades for the last time 35 days hence, on Oct 16.

Odds

Of the six completed bull signals during the past year, only two were successful, on average yielding 12.8% over 44 days The four unsuccessful signals produced a 6.4% loss over 23 days, on average.

That historical tendency to whipsaw suggests that a non-directional iron condor will be the strategy most likely to succeed.

Ranges

Click on chart to enlarge.

LNKD at 9:42 a.m. New York time, 90 days 2-hour bars

Implied volatility stands at 35.4%, which is 1.4 times the VIX, a measure of volatility of the S&P 500 index. LNKD’s volatility stands in the 31st percentile of its annual range, a level that disqualifies it from further consideration under my volatility strategy, which relies on high implied volatility upon entry.

At this point I can cut the analysis short.

Decision for My Account

I won't trade LNKD today because implied volatility is below the 50th percentile minimum that I require.

-- Tim Bovee, Portland, Oregon, Sept. 11, 2015

References

My volatility trading rules can be read here.


Alerts

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Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.