UAL Analysis

United Continental Holdings Inc. (UAL)

Update 4/25/2017: UAL whipsawed with a decline after earnings were published, and then rose to profitability. I exited at my target, 25% of maximum potential profit.

Shares rose by 1.6% over eight days, or a +71% annual rate. The options position produced a 33.4% yield on debit for a +1,525% annual rate.


UAL publishes earnings on Monday after the closing 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 35%, which is 2.3 times the VIX, a measure of the volatility of the S&P 500 index.

UAL’s IV stands in the 23rd percentile of its annual range and the 67th percentile of its most recent broad movement.

The price used for analysis was $69.99.

Premium: $5.11 Expire OTM  
UAL-iron fly Strike Odds Delta
Long 80.00 92.9% 9
Break-even 75.11
Short 70.00 52.0% 52
Short 70.00 48.0% 48
Break-even 64.89
Long 60.00 89.5% 9

The premium is 51% 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 UAL as described above. The stock at the time of entry was priced at $69.99.

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

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