AMGN Analysis

Amgen Inc. (AMGN)

Update 4/27/2017: AMGN gapped sharply to the downside after earnings were published and then moved sharply to the upside, back into winning territory. I exited at 38.4% maximum potential profit.

Shares showed a net decline of 0.9% over one day, or a -321% annual rate. The options position produced a 63.3% yield on debit for a +22,738% annual rate


AMGN publishes earnings on Wednesday after the closing bell.

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

Implied volatility stands at 22%, which is 2.1 times the VIX, a measure of the volatility of the S&P 500 index.

AMGN’s IV stands in the 38th percentile of its annual range and the 59th percentile of its most recent broad movement.

The price used for analysis was $164.81.

Premium: $4.85 Expire OTM  
AMGN-iron fly Strike Odds Delta
Long 175.00 93.2% 7
Break-even 169.85
Short 165.00 52.8 49
Short 165.00 47.5% 51
Break-even 159.85
Long 155.00 90.1% 9

The premium is 49% of the width of the position’s wings.

The risk/reward ratio is 1.1:1.

Decision for My Account

I have entered a position on AMGN as described above. The stock at the time of entry was priced at $164.75.

By Tim Bovee, Portland, Oregon, April 26, 2017

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