GameStop Corp. (GME)
Update 4/10/2017: GME gapped sharply to the downside after earnings were published and never returned to profitability. I exited for a loss 12 days before the position expired.
Shares declined b6 8.4% over 18 days, or a -170% annual rate. The options position produced a -9.1% loss on debit for a -183% annual rate.
GME publishes earnings on Thursday after the closing bell.
I shall use the APR series of options, which trades for the last time 29 days hence, on April 21.
Implied volatility stands at 43%, which is 3.4 times the VIX, a measure of the volatility of the S&P 500 index.
GME’s IV stands in the 62nd percentile of its annual range and the 60th percentile of its most recent broad movement.
The price used for analysis was $24.11.
|GME – iron fly||Strike||Odds||Delta|
The premium is 55% of the width of the position’s wings.
The risk/reward ratio is 0.9:1.
Decision for My Account
I have entered a position on GME as described above. The stock at the time of entry was priced at $24.05.
By Tim Bovee, Portland, Oregon, March 23, 2017