The health-care products company Johnson & Johnson (JNJ), headquartered in New Brunswick, New Jersey, publishes earnings on Tuesday prior to the opening bell.
[JNJ in Wikipedia]
Click on chart to enlarge.
|JNJ at 12 p.m. New York time, 30 days hourly bars|
|Week||SD1 68.2%||SD2 95%||Chart||Earns|
I shall use the JUL4 weekly series of options, which trades for the last time 11 days hence, on July 24.
short the $97.50 puts and long the $95.50 puts,
sold for a credit and expiring July 25.
Probability of expiring out-of-the-money
The zone of profit in the proposed trade covers a $2.25 move either way. The biggest immediate move after each of the past four earnings announcements was the same, $2.75, and the average was $1.75.
The risk/reward ratio is 3.9:1.
Decision for My Account
I've opened a position in JNJ as described above.
-- Tim Bovee, Portland, Oregon, July !0, 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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