Apple Inc. (AAPL)
Update Feb. 8, 2017: AAPL gapped upward after earnings were published, putting it beyond the profit zone of my position. It continued to rise, more moderately, thereafter. I exited the position to avoid the likelihood of assignment when shares went ex-dividend on Feb. 9.
Shares rose by 8.9% over eight days, or a +408% annual rate. The options position produced a 35.5% loss on debit for a -1,620% annual rate.
AAPL publishes earnings on Tuesday after the closing bell.
I shall use the MAR series of options, which trades for the last time 45 days hence, on March 17.
Implied volatility stands at 23%, which is 1.8 times the VIX, a measure of the volatility of the S&P 500 index.
AAPL’s IV stands in the 42nd percentile of its annual range and the 96th percentile of its most recent broad movement.
The price used for analysis was $120.75.
The premium is 56% of the width of the position’s wings.
The risk/reward ratio is 0.8:1.
Decision for My Account
I have entered a position on AAPL as described above. The stock at the time of entry was priced at $120.76.
By Tim Bovee, Portland, Oregon, Jan. 31, 2017