The online auction house eBay Inc. (EBAY), headquartered in San Jose, California, publishes earnings on Thursday before the opening bell.
[EBAY in Wikipedia]
Click on chart to enlarge.
|EBAY at 10:30 a.m. New York time, 30 days hourly bars|
I shall use the AUG weekly series of options, which trades for the last time 37 days hence, on Aug. 21.
|Week||SD1 68.2%||SD2 95%||Chart||Earns|
short the $60 puts and long the $57.50 puts,
sold for a credit and expiring Aug. 22.
Probability of expiring out-of-the-money
The premium is $0.74, which is 30% of the width of the position’s wings.The stock at the time of purchase was priced at $63.66.
The risk/reward ratio is 2.3:1
The zone of profit in the proposed trade covers a $$3.75 move either way. The biggest immediate move after each of the past four earnings announcements was $3.77, and the average was $2.15.
Decision for My Account
I've opened a position in EBAY as described above.
-- Tim Bovee, Portland, Oregon, July 15, 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.
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