Abbott Laboratories (ABT)
Update 5/1/2017: ABT rose over four days after earnings were published and then, in retracing the decline, reached my target price. I exited at 25.2% of maximum potential profit.
Shares showed a net rise of 0.08% over 13 days, or a +2.3% annual rate. The options position produced a 33.6% yield on debit for a +944% annual rate.
ABT publishes earnings on Wednesday before the opening bell.
I shall use the MAY series of options, which trades for the last time 31 days hence, on May 19.
Implied volatility stands at 21%, which is 1.4 times the VIX, a measure of the volatility of the S&P 500 index.
ABT’s IV stands in the 38th percentile of its annual range and the 72nd percentile of its most recent broad movement.
The price used for analysis was $43.34.
The premium is 53% of the width of the position’s wings.
The risk/reward ratio is 0.8:1.
Decision for My Account
I have entered a position on ABT as described above. The stock at the time of entry was priced at $43.35.
By Tim Bovee, Portland, Oregon, April 18, 2017