Baidu Inc. (BIDU)
BIDU publishes earnings on Thursday after the closing bell.
I shall use the series of weekly options that trade for the last time eight days hence, on May 5.
Implied volatility stands at 30%, which is 2.8 times the VIX, a measure of the volatility of the S&P 500 index.
BIDU’s IV stands in the 59th percentile of its annual range and the 90th percentile of its most recent broad movement.
The price used for analysis was $186.69.
The premium is 52% of the width of the position’s wings.
The risk/reward ratio is 1.1:1.
Decision for My Account
BIDU is an expensive stock, and that carries more dollar risk than I care to assume. I’m passing the trade.
By Tim Bovee, Portland, Oregon, April 27, 2017