SGMS Analysis

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
SGMS   Odds Delta
Calls
Long 27.00 91.3% 12
Break-even 23.91
Short 21.00 53 55
Puts
Short 21.00 47.0% 45
Break-even 18.09
Long 15.00 89.3% 7

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

3 thoughts on “SGMS Analysis

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