USB Analysis

U.S. Bancorp (USB)

Update 2/8/2017: USB rose after earnings were published and remained above the limit of the profit zone thereafter. I exited nine days before the position’s options traded for the last time.

Shares rose by 5.0% over 22 days, or an 82% annual rate. The options position produced a 35.5% loss on debit for a -1,620% annual rate.


 

USB publishes earnings on Wednesday before the opening bell.

I shall use the FEB series of options, which trades for the last time 31 days hence, on Feb. 17.

Implied volatility stands at 23%, which is 1.9 times the VIX, a measure of the volatility of the S&P 500 index.

USB’s IV stands in the 24th percentile of its annual range and the 66th percentile of its most recent broad movement.

The price used for analysis was $50.34.

Premium: $2.06 FEB iron fly
USB   Odds Delta
Calls
Long 55.00 93.6% 7
Break-even 52.06
Short 50.00 48.7% 54
Puts
Short 50.00 51.7% 46
Break-even 47.94
Long 45.00 91.5% 7

The premium is 41% of the width of the position’s wings.

The risk/reward ratio is 1.4:1.

Decision for My Account

I have entered a position on USB as described above. The stock at the time of entry was priced at $50.30.

By Tim Bovee, Portland, Oregon, Jan. 17, 2017

4 thoughts on “USB Analysis

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