Exxon Mobil Corp. (XOM)

Update 2/6/2017: XOM’s price fell after earnings missed the Street estimate by a wide margin. The stock goes ex-dividend on Feb. 7, and I exited at 21.4% of the maximum potential gain to avoid the risk of early assignment.

XOM shares declined by 1.7% over seven days, or a -87% annual rate. The options positions produced a 21.4% yield on debit for a +1,417% annual rate.

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XOM publishes earnings on Tuesday before the  opening bell.

I shall use the MAR series of options, which trades for the last time 46 days hence, on March 17.

Implied volatility stands at 19%, which is 1.6 times the VIX, a measure of the volatility of the S&P 500 index.

XOM’s IV stands in the 18th percentile of its annual range and the 54th percentile of its most recent broad movement.

The price used for analysis was $84.51.

Premium:	$3.79	MAR	iron fly
XOM		Odds	Delta
Calls
Long	90.00	90.3%	11
Break-even	86.29
Short	82.50	36.6%	67
Puts
Short	82.50	61.4%	36
Break-even	78.71
Long	75.00	92.2%	7

The premium is 50% of the width of the position’s wings.

The risk/reward ratio is 1:1.

Decision for My Account

I have entered a position on XOM as described above. The stock at the time of entry was priced at $84.54.

By Tim Bovee, Portland, Oregon, Jan. 30, 2017