Scientific Games Corp. (SGMS)
Update 3/14/2017: SGMS began a steady declined after earnings were published. I exited at 23.0% of maximum potential profit.
Shares declined by 1.5% over 12 days, or a -47% annual rate. The options position produced a +29.9% yield on debit for a +910% annual rate.
SGMS publishes earnings on Thursday after the closing bell.
I shall use the APR series of options, which trades for the last time 50 days hence, on April 21.
Implied volatility stands at 64%, which is 5.6 times the VIX, a measure of the volatility of the S&P 500 index.
SGMS’s IV stands in the 29th percentile of its annual range and the 67th percentile of its most recent broad movement.
The price used for analysis was $21.13.
|Premium:||$2.91||Expire OTM||iron fly|
The premium is 49% of the width of the position’s wings.
The risk/reward ratio is 1.1:1.
Decision for My Account
I have entered a position on SGMS as described above. The stock at the time of entry was priced at $21.13.
By Tim Bovee, Portland, Oregon, March 2, 2017