AXP Analysis

American Express Co. (AXP)

Update 1/20/2017: AXP shares declined after coming in under the Street estimate of earnings per shares by 7%. Implied volatility also dropped sharply, moving my position to my profit point, which is 25% of maximum potential profit.

Shares declined by 0.9% over one day, or a -325% annual rate. The options position produced a 33.2% yield on debit for a +760% annual rate.

AXP publishes earnings today after the closing  bell.

I shall use the FEB series of options, which trades for the last time 29 days hence, on Feb. 17.

Implied volatility stands at 28%, which is 2.1 times the VIX, a measure of the volatility of the S&P 500 index.

AXP’s IV stands in the 46th percentile of its annual range and the 81st percentile of its most recent broad movement.

The price used for analysis was $76.89.

Premium: $4.01 MAR iron fly
AXP   Odds Delta
Calls
Long 82.50 84.0% 18
Break-even 79.01
Short 75.00 38.5% 64
Puts
Short 75.00 62.3% 35
Break-even 70.99
Long 67.50 92.1% 7

The premium is 53% of the width of the position’s wings.

The risk/reward ratio is 0.9:1.

Decision for My Account

I have entered a position on AXP as described above. The stock at the time of entry was priced at $76.95.

By Tim Bovee, Portland, Oregon, Jan. 19, 2017

3 thoughts on “AXP Analysis

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