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.
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