BMY Analysis

Bristol-Myers Squibb Co. (BMY)

Update 2/27/2017: BMY rose continually after earnings were published, moving beyond the breakeven point.

Shares rose by 18.2% over 33 days, or a +201% annual rate. Tye optons position produced a 43.8% loss on debit for a -484% annual rate.


BMY publishes earnings on Thursday before the opening bell.

I shall use the MAR series of options, which trades for the last time 51 days hence, on March 17.

Implied volatility stands at 29%, which is 2.7 times the VIX, a measure of the volatility of the S&P 500 index.

BMY’s IV stands in the 50th percentile of its annual range and the 34th percentile of its most recent broad movement.

The price used for analysis was $49.50.

Premium: $3.08 MAR iron fly
BMY   Odds Delta
Long 55.00 85.8% 17
Break-even 52.08
Short 49.00 49.9% 54
Short 49.00 50.7% 45
Break-even 45.92
Long 43.00 88.6% 9

The premium is 52% 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 BMY as described above. The stock at the time of entry was priced at $49.46.

By Tim Bovee, Portland, Oregon, Jan. 25, 2017

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