AT&T Inc. (T)

Update April 26, 2017: T rose after earnings were published and remained within the zone of maximum profit. That positioning within the structure of the trade, combined with a sharp declined in implied volatility, brought me close enough to my goal to exit.

Shares rose by 0.7% over one day, or a 247% annual rate. The options position produced a 32.7% yield on debit for a +11,918% annual rate.

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T publishes earnings on Tuesday after the closing bell.

I shall use the series of weekly options that trade for the last time 10 days hence, on May 5.

Implied volatility stands at 46%, which is 1.6 times the VIX, a measure of the volatility of the S&P 500 index.

T’s IV stands in the 43rd percentile of its annual range and the 96th percentile of its most recent broad movement.

The price used for analysis was $39.80.

Premium:	$0.67	Expire OTM
T iron condor	Strike	Odds	Delta
Calls
Long	41.50	91.1%	10
Break-even	40.67
Short	40.00	57.1%	44
Puts
Short	39.50	41.0%	58
Break-even	38.67
Long	38.00	87.6%	12

The premium is 43% of the width of the position’s wings.

The risk/reward ratio is 1.3:1.

Decision for My Account

I have entered a position on T as decribed above. The stock at the time of entry was priced at $39.83.

By Tim Bovee, Portland, Oregon, April 25, 2017