WBA Analysis

Walgreens Boots Alliance Inc. (WBA)

Update 1/20/2017: WBA moved sideways after earnings were published and fell today after announcing that it would pay $50 million to resolve a prescription kickback case. (Reuters storyI exited at 25% of maximum potential profit.

Shares rose by 1.4% over 16 days, or a +31% annual rate. The options position produced a 33.3% yield on debit for a +760% annual rate.

WBA publishes earnings on Thursday before the opening bell.

I shall use the FEB series of options, which trades for the last time 44 days hence, on Feb. 17.

Implied volatility stands at 31%, which is 2.8 times the VIX, a measure of the volatility of the S&P 500 index.

WBA’s IV stands in the 42nd percentile of its annual range and the 71st percentile of its most recent broad movement.

WBA FEB iron condor  
3.36 Strike Odds Delta
Calls
Long 82.50 62.6% 41
Break-even 85.86
Short 82.50 50.3% 54
Puts
Short 82.50 49.8% 46
Break-even 79.14
Long 75.00 81.3% 16

The price used for analysis was $83.11.

The premium is 0.9% of the width of the position’s wings.

The risk/reward ratio is 1.2:1.

 

Decision for My Account

I have entered a position on WBA as described above.

The stock at the time of entry was priced at $83.05.

Tim Bovee, Portland, Oregon, Jan. 4, 2017

3 thoughts on “WBA Analysis

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