JWN Analysis

Nordstrom Inc. (JWN)

Update 3/13/2017: JWN rose for two days after earnings were published, traded in a range for our days and then worked its way lower. I exited at my target price of 25% of maximum potential profit with the share price near the price of the pre-earnings close.

Shares declined by 1.8% over 18 days, or a -37% annual rate. The options position produced a 33.3% yield on debit for a 674% annual rate.


JWN publishes earnings on Thursday after the closing bell.

I shall use the APR series of options, which trades for the last time 57 days hence, on April 21.

Implied volatility stands at 48%, which is 4.1 times the VIX, a measure of the volatility of the S&P 500 index.

JWN’s IV stands in the 72nd percentile of its annual range and the 71st percentile of its most recent broad movement.

The price used for analysis was $44.61.

Premium: $5.05 Expire OTM iron fly
JWN   Odds Delta
Long 52.50 88.4% 15
Break-even 47.55
Short 42.50 42.1% 64
Short 42.50 56.8% 36
Break-even 37.45
Long 35.00 88.9% 8

The premium is 58% 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 JWN as described above. The stock at the time of entry was priced at $44.59.

By Tim Bovee, Portland, Oregon, Feb. 23, 2017

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