QVCA Analysis

QVC Group (QVCA)

QVCA publishes earnings on Tuesday before the opening bell.

I shall use the APR series of options, which trades for the last time 53 days hence, on April 21.

Implied volatility stands at 49%, which is 4.2 times the VIX, a measure of the volatility of the S&P 500 index.

QVCA’s IV stands in the 73rd percentile of its annual range and the 72nd percentile of its most recent broad movement.

The price used for analysis was $19.81.

Premium: $2.05 Expire OTM iron fly
QVCA   Odds Delta
Long 26.00 91.7% 12
Break-even 21.05
Short 19.00 42,3% 64
Short 19.00 58.2% 36
Break-even 16.95
Long 12.00 89.9% 5

The premium is 29% of the width of the position’s wings.

The risk/reward ratio is 2.4:1.

Decision for My Account

I normally aim for premium at half the width of the wings and a risk reward ratio of 1:1. This grid won’t allow me to get close to those metrics, and so I am passing on the trade.

By Tim Bovee, Portland, Oregon, Feb. 27, 2017

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