Best Buy Co. Inc,. (BBY)
Update 3/2/2017: BBY fell sharply after earnings were published, pushing the position to 25.7% of maximum potential profit, slightly better than my target price. I exited in the morning, missing a large price rise the next day that would have wiped out my profits.
Shares rose by 0.8% over two days, for a +137% annual rate. The options position produced a 34.6% yield on debit for a +6,312% annual rate.
I shall use the APR series of options, which trades for the last time 52 days hence, on April 21.
Implied volatility stands at 50%, which is four times the VIX, a measure of the volatility of the S&P 500 index.
BBY’s IV stands in the 90th percentile of its annual range and the 94th percentile of its most recent broad movement.
The price used for analysis was $44.04.
|Premium:||$5.02||Expire OTM||iron fly|
The premium is 46% of the width of the position’s wings.
The risk/reward ratio is 1.2:1.
Decision for My Account
I have entered a position on BBY as described above. The stock at the time of entry was priced at $43.99.
By Tim Bovee, Portland, Oregon, Feb. 28, 2017