ABT Analysis

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.

Premium: $1.59 Expire OTM  
ABT-iron fly Strike Odds Delta
Long 46.00 88.6% 12
Break-even 44.59
Short 43.00 46.7% 56
Short 43.00 53.9% 44
Break-even 41.41
Long 40.00 87.3% 11

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

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