Dollar General Corp. (DG)
Update 3/21/2017: DG traded sideways for two trading days after earnings were published and then declined for two more. I exited at 22.2% of maximum potential profit, ending the trade’s short lifespan.
Shares declined by 1.0% over eight days, or a -58.9% annual rate. The options position produced a 28.6% yield on debit for a +1,738% annual rate.
DG publishes earnings on Thursday before the opening bell.
I shall use the APR series of options, which trades for the last time 37 days hence, on April 21.
Implied volatility stands at 33%, which is 2.9 times the VIX, a measure of the volatility of the S&P 500 index.
DG’s IV stands in the 71st percentile of its annual range and the 73rd percentile of its most recent broad movement.
The price used for analysis was $72.43.
|DG – iron fly||Strike||Odds||Delta|
The premium is 61% of the width of the position’s wings.
The risk/reward ratio is 0.6:1.
Decision for My Account
I have entered a position on DG as described above. The stock at the time of entry was priced at $72.30.
By Tim Bovee, Portland, Oregon, March 15, 2017