The cybersecurity company FireEye Inc. (FEYE), headquartered in Milpitas, California, publishes earnings on Thursday after the closing bell.
[FEYE in Wikipedia]
I shall use the AUG1 weekly series of options, which trades for the last time eight days hence, on Aug. 7.
Click on chart to enlarge.
|FEYE after the July 29 close, 30 days hourly bars|
|Week||SD1 68.2%||SD2 95%||Chart||Earns|
short the $42.50 puts and long the $41.50 puts,
sold for a credit and expiring Aug. 8.
Probability of expiring out-of-the-money
The premium at the time of analysis was $0.37, which is 37% of the width of the position’s wings.The stock at the time of purchase was priced at $47.54.
The risk/reward ratio is 1.7:1.
The zone of profit in the proposed trade covers a $5.25 move either way. The biggest immediate move after each of the past four earnings announcements was $5.13, and the average was $3.76.
Decision for My Account
I intend to open a position in FEYE as described above. The analysis was done prior to the market open on the day I shall trade, and I'll update this analysis if events force a change in plans.
-- Tim Bovee, Fukuoka, Japan, July 30, 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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