SWKS Analysis

Update 8/1/2015: The SWKS calls expired without value.

The stock price declined by 7.7% over eight days, or a -349% annual rate. The options produced a +57.8%yield on debit, for a +2,639% annual rate.

---

Update 7/30/2015: SWKS was at the edge of profit as expiration approached and I exited the puts, transforming the iron condor into a bear call spread. I'll calculate profit/loss on the position after it expires on Saturday.

---

The semiconductor company Skyworks Solutions Inc. (SWKS), headquartered in Woburn, Massachusetts, publishes earnings on Thursday after the closing bell.

[SWKS in Wikipedia]

SWKS

Ranges

Click on chart to enlarge.

SWKS at 11:55 a.m. New York time, 30 days hourly bars

Implied volatility stands at 48.8%, which is 3.9 times the VIX, a measure of volatility of the S&P 500 index. SWKS’s volatility stands in the 78th percentile of its most recent rise.

Ranges implied by options and the chart

Week	SD1 68.2%	SD2 95%	Chart	Earns
Upper	110.96	118.44	112.88	110.01
Lower	96.00	88.52	93,27	96.95
Gain/loss	7.2%	14.5%

Implied volatility 1 and 2 standard deviations; chart support and resistance, maximum earns move
The Trade

I shall use the JUL5 weekly series of options, which trades for the last time eight days hence, on July 31.

Iron condor, short the $110 calls and long the $114 calls,
short the $95 puts and long the $91 puts,
sold for a credit and expiring Aug. 1.
Probability of expiring out-of-the-money

AUG	Strike	OTM
Upper	110	74.7%
Lower	95	77.0%

The premium is $1.31, which is a third of the width of the position’s wings.The stock at the time of purchase was priced at $103.37.

The risk/reward ratio is 1.9:1.

The zone of profit in the proposed trade covers a $7.50 move either way. The biggest immediate move after each of the past four earnings announcements was $6.53, and the average was $4.09.

Decision for My Account

I've opened a position in SWKS as described above.

-- Tim Bovee, Portland, Oregon, July 23, 2015

References

My volatility trading rules can be read here.


Alerts

Two social media feeds provide notification whenever something new is posted.

• On Twitter, Follow Tim Bovee: https://twitter.com/TimBovee
• On Facebook, Like Private Trader: https://www.facebook.com/PrivateTrader

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.