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.
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