VeriFone Systems Inc. (PAY)
Update 3/10/2017: PAY’s implied volatility declined sharply after earnings came in at about half of the Street estimate. I exited at 25% of maximum potential profit the day after entering the position.
Shares declined by 3.9% over a day, or a -1,408% annual rate. The options position produced a 33.3% yield on debit for a +12,167% annual rate.
PAY publishes earnings on Thursday, March 9, after the closing bell.
I shall use the APR series of options, which trades for the last time 43 days hence, on April 21.
Implied volatility stands at 45%, which is 3.6 times the VIX, a measure of the volatility of the S&P 500 index.
PAY’s IV stands in the 46th percentile of its annual range and the 89th percentile of its most recent broad movement.
The price used for analysis was $20.23.
|Premium:||$1.88||Expire OTM||iron fly|
The premium is 47% 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 PAY as described above. The stock at the time of entry was priced at $20.22.
By Tim Bovee, Portland, Oregon, March 9, 2017