PAY Analysis

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

JAN Strike OTM Δ
Calls 16 47.2% 60
Puts 16 62.9% 40


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

3 thoughts on “PAY Analysis

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