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.
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