salesforce.com inc. (CRM)
Update 3/8/2017: CRM rose sharply after earnings were published, staying in a sideways pattern long enough for time decay and falling implied volatility to produce sufficient profit for an exit, at 24.9% of maximum potential profit.
Shares rose by 11.0% over eight days, or a +499% annual rate. Tue options positon produced a 36.0% yield on debit for a +1,640% annual rate
CRM publishes earnings on Tuesday after the closing bell.
I shall use the APR series of options, which trades for the last time 52 days hence, on April 21.
Implied volatility stands at 34%, which is 2.7 times the VIX, a measure of the volatility of the S&P 500 index.
CRM’s IV stands in the 64th percentile of its annual range and the 60th percentile of its most recent broad movement.
The price used for analysis was $81.01.
|Premium:||$6.58||Expire OTM||iron fly|
The premium is 48% of the width of the position’s wings.
The risk/reward ratio is 1.3:1.
Decision for My Account
I have entered a position on CRM as described above. The stock at the time of entry was priced at $80.98.
By Tim Bovee, Portland, Oregon, Feb. 28, 2017