Tesla Inc. (TSLA)
TSLA publishes earnings on Wednesday after the closing bell.
I shall use the APR series of options, which trades for the last time 58 days hence, on April 21.
Implied volatility stands at 46%, which is 3.9 times the VIX, a measure of the volatility of the S&P 500 index.
TSLA’s IV stands in the 41st percentile of its annual range and at the peak of its most recent broad movement.
The price used for analysis was $275.60.
| Premium: | $29.28 | Expire OTM | iron fly |
| TSLA | Odds | Delta | |
| Calls | |||
| Long | 325.00 | 87.5% | 16 |
| Break-even | 304.28 | ||
| Short | 275.00 | 52.2% | 54 |
| Puts | |||
| Short | 275.00 | 47.5% | 46 |
| Break-even | 245.72 | ||
| Long | 220.00 | 87.4% | 9 |
The premium is 56% of the width of the position’s wings.
The risk/reward ratio is 0.9:1.
Decision for My Account
I like the trade, but I’m passing on it. The high price of TSLA stock would force me to commit a higher share of my trading funds than I am comfortable doing, even for a single contract. Hey, Elon Musk! Time for a stock split.
By Tim Bovee, Portland, Oregon, Feb. 22, 2017
Tim Bovee, Private Trader 
[…] analyzed TSLA but declined the trade because the price per contract exceeded my […]
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