Shares rose 0.9% over one day, or a +342% annual rate. The options position produced an 84.6% yield on debit, for a +30.885% annual rate.
The discount retailer Target Corp. (TGT), headquartered in Minneapolis, Minnesota, publishes earnings on Wednesday before the opening bell.
I shall use the MAY4 Weeklys series of options, which trades for the last time three days hence, on May 22.
[TGT in Wikipedia]
Click on chart to enlarge.
|TGT at 11:05 a.m. New York time, 30 days hourly bars|
|Week||SD1 68.2%||SD2 95%||Chart|
The position provides complete coverage of the one standard deviation range within the profit zone.
short the $76 puts and long the $74.5 puts
sold for a credit and expiring May 23
Probability of expiring out-of-the-money
The risk/reward ratio stands at 1.1:1. The premium is $0.75 ($0.32 for the calls and $0.33 for the puts).
Decision for My Account
I've opened a position on TGT as described above.
-- Tim Bovee, Portland, Oregon, May 19, 2015
My volatility trading rules can be read here.
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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
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