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.
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