Shares rose by 0;4% over 13 days, or a +11% annual rate. The optons produced a +145.0% yield on debit, for a +4,071% annual rate.
The software company Adobe Systems Inc. (ADBE), headquartered in San Jose, California, publishes earnings after the closing bell on Thursday.
[ADBE in Wikipedia]
I shall use the OCT series of options, which trades for the last time 29 days hence, on Oct 16.
Click on chart to enlarge.
|ADBE at 2:52 p.m. New York time|
|Week||SD1 68.2%||SD2 95%||Chart||Earns|
short the $72.50 puts and long the $70 puts,
sold for a credit and expiring Oct. 17.
Probability of expiring out-of-the-money
The premium is $0.49 which is 29% of the width of the position’s wings. The stock at the time of purchase was priced at $81.7
The risk/reward ratio is 4.2:1.
The zone of profit in the proposed trade covers a $8.75 move either way. The biggest immediate move after each of the past four earnings announcements was $6.28, and the average was $3.28.
Decision for My Account
I have opened a position on ADBE as described above.
-- Tim Bovee, Portland, Oregon, Sept. 17, 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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