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 story) I 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.
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