Oracle Corp. (ORCL)
ORCL publishes earnings on Thursday after the closing bell.
Update 12/16/2016: ORCL gapped down sharply after exceeding earnings expectations (Go figure!), and I exited for a profit at about my normal goal for the iron fly structure; At 25% of maximum possible profit.
Shares declined by 3.96%over less than a day, for a -1,445% annual rate. The options position produced a 33.4% yield on debit for a +12,204% annual rate
I shall use the JAN series of options, which trades for the last time 36 days hence, on Jan. 20.
Implied volatility stands at 25%, which stands in the 42nd percentile of its annual range and the 90th percentile of its most recent broad movement. The price used for analysis was $40.92.
Iron condor, short the $40 calls and long the $45 calls,
short the $40 puts and long the $35 puts,
sold for a credit and expiring Jan. 21.
Probability of expiring out-of-the-money
The premium is $2.19, which is 44% of the width of the position’s wings.
The risk/reward ratio is 1.3:1.
Decision for My Account
I have entered a position on ORCL as described above. The stock at the time of entry was priced at $40.93.
— Tim Bovee, Portland, Oregon, Dec. 15, 2016