RF Analysis

Regions Financial Corp. (RF)

Update 4/25/2017: RF whipsawed for a slight decline after earnings were published and then declined the day thereafter, then reversed to the upside, allowing at exit at my target of 25% of maximum potential profit. 

Shares rose by 0.7% over eight days, or a +31% annual rate. The options position produced a 33.3% yield on debit for a +1,521% annual rate.


 

RF publishes earnings on Tuesday before the opening bell.

I shall use the MAY series of options, which trades for the last time 32 days hence, on May 19.

Implied volatility stands at 36%, which is 2.4 times the VIX, a measure of the volatility of the S&P 500 index.

RF’s IV stands in the 35th percentile of its annual range and the 96th percentile of its most recent broad movement.

The price used for analysis was $13.88.

Premium: $0.96 Expire OTM  
RF-iron fly Strike Odds Delta
Calls
Long 16.00 93.6% 8
Break-even 14.96
Short 14.00 55.2% 49
Puts
Short 14.00 44.7% 51
Break-even 13.04
Long 12.00 89.4% 9

The premium is 50% of the width of the position’s wings.

The risk/reward ratio is 1:1.

Decision for My Account

I have entered a position on RF as described above. The stock at the time of entry was priced at $13.90.

By Tim Bovee, Portland, Oregon, April 17, 2017

3 thoughts on “RF Analysis

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