Altria Group Inc. (MO)
Update 3/3/2017: MO rose continually after earnings were published, quickly moving above the zone of profitability. As options expiration and an ex-dividend date both approached, I exited for a loss.
Shares rose by 5.9% over 30 days, or a 71% annual rate. The options position produced a 34.0% loss on debit for a -414% annual rate.
MO publishes earnings on Wednesday before the opening 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 21%, which is 1.6 times the VIX, a measure of the volatility of the S&P 500 index.
MO’s IV stands in the 45th percentile of its annual range and the 58th percentile of its most recent broad movement.
The price used for analysis was $71.16.
The premium is 61% 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 MO as described above. The stock at the time of entry was priced at $71.15.
By Tim Bovee, Portland, Oregon, Jan. 31, 2017