VeriFone Systems Inc. (PAY)
Update 1/10/2017: PAY rose beyond the boundary of the profit zone into loss territory after earnings were published, and remained there until the exit.
Shares rose by 13.5% over 29 days, or a +178% annual rate. The optoins positions produced a 28.3% loss on debit, for a -356% annual rate.
PAY publishes earnings on Monday after the closing bell.
I shall use the JAN series of options, which trades for the last time 39 days hence, on Jan. 20.
Implied volatility stands at 63%, which stands in the 93rd percentile of its annual range and the 94th percentile of its most recent broad movement. The price used for analysis was $16.45.
Iron condor, short the $16 calls and long the $20 calls,
short the $16 puts and long the $12 puts,
sold for a credit and expiring Jan. 21.
Probability of expiring out-of-the-money
The premium is $2.00, which is 50% of the width of the position’s wings.
The risk/reward ratio is 1:1.
Decision for My Account
I have entered a position on PAY as described above. The stock at the time of entry was priced at $16.47.
— Tim Bovee, Portland, Oregon, Dec. 12, 2016