Shares rose by 7.2% over 50 days, or a +53% annual rate. The options position produced a 60.0% yield on debit, for a +438% annual rate.
The athletic apparel and equipment maker NIKE Inc. (NKE), headquartered in Washington County outside of Beaverton, Oregon, publishes earnings on Thursday after the closing bell.
[NKE in Wikipedia]
I shall use the NOV series of options, which trades for the last time 57 days hence, on Nov. 20.
Click on chart to enlarge.
|NKE at 10:20 a.m. New York time, 90 days 2-hour bars|
|Week||SD1 68.2%||SD2 95%||Chart||Earns|
The position covers all of the maximum post-earnings movement range and the chart range as well, while leaving a small portion of the one standard deviation range beyond the profit zone at both top and bottom.
short the $100 puts and long the $95 puts,
sold for a credit and expiring Nov. 21.
Probability of expiring out-of-the-money
The premium is $1.12, which is 22% of the width of the position’s wings.The stock at the time of purchase was priced at $113.86.
The risk/reward ratio is 3.5:1.
The zone of profit in the proposed trade covers a $12.50 move either way. The biggest immediate move after each of the past four earnings announcements was $9.75, and the average was $5.04.
Decision for My Account
I've opened an iron condor on NKE as described above.
-- Tim Bovee, Portland, Oregon, Sept. 24, 2015
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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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