Monday, November 23, 2015

PANW Analysis

The network security company Palo Alto Networks Inc. (PANW), headquartered in Santa Clara, California, publishes earnings on Monday after the closing bell.

[PANW in Wikipedia]


I shall use the JAN series of options, which trades for the last time 53 days hence, on Jan. 16.


Implied volatility stands at 46%, which is triple times the VIX, a measure of volatility of the S&P 500 index. PANW’s volatility stands in the 46th percentile of its annual range.

My requirement is that the implied volatility percentile be at the 50th or greater of the annual range. PANW started the day in the 51st percentile but declined to the 46th while I placed other trades. (My practice is to analyze and place trades in descending order of the IV percentile, meaning that PANW was the caboose on this particular train.)

Given the new conditions, I can go directly to a decision without further analysis.

Decision for My Account

PANW's low implied volatility relative to its annual range disqualifies from an earnings trade at this point. I plan no further analysis and am passing on the trade.

-- Tim Bovee, Portland, Oregon, Nov. 23, 2015


Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, 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.

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