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.
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