Lockheed Martin Corp. (LMT)
Update 2/24/2017: LMT rose almost continually in the weeks after earnings were published. I exited at 12.5% of maximum potential profit — about half of my target for trades structured the way LMT is — in order to avoid an ex-dividend date.
Shares rose by 3.4% over 32 days, or a +39% annual rate. The options position produced a 14.3% yield on debit for a +163% annual rate
LMT publishes earnings on Tuesday before the opening bell.
I shall use the MAR series of options, which trades for the last time 53 days hence, on March 17.
Implied volatility stands at 22%, which is 1.8 times the VIX, a measure of the volatility of the S&P 500 index.
LMT’s IV stands in the 52nd percentile of its annual range and the 77th percentile of its most recent broad movement.
The price used for analysis was $255.39.
The premium is 59% of the width of the position’s wings.
The risk/reward ratio is 0.7:1.
Decision for My Account
The stock at the time of entry was priced at $255.67.
By Tim Bovee, Portland, Oregon, Jan. 23, 2017