EBAY Analysis

eBay Inc. (EBAY)

Update 4/20/2017: EBAY gapped to the downside after earnings were published but remained within the profit zone. I exited at 25% of maximum potential profit.

Shares declined by 4.1% over one day, or a -1,500% annual rate. The options position produced a +33.3% yield on debit for a +12,167% annual rate.


 

EBAY publishes earnings on Wednesday after the closing bell.

I shall use the APR monthlies options, which trades for the last time two days hence, on April 21.

Implied volatility stands at 36%, which is 2.5 times the VIX, a measure of the volatility of the S&P 500 index.

EBAY’s IV stands in the 75th percentile of its annual range and the 71st percentile of its most recent broad movement.

The price used for analysis was $34.07.

Premium: $1.88 Expire OTM  
EBAY-iron fly Strike Odds Delta
Calls
Long 37.50 89.8% 12
Break-even 35.88
Short 34.00 50.5% 53
Puts
Short 34.00 49.3% 47
Break-even 32.12
Long 30.50 990.1% 8

The premium is 54% of the width of the position’s wings.

The risk/reward ratio is 0.:1.

Decision for My Account

The stock at the time of entry was priced at $34.06.

By Tim Bovee, Portland, Oregon, April 19, 2017

2 thoughts on “EBAY Analysis

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