Chevron Corp. (CVX)
Update 4/28/2017: CVX rose sharply after earnings wee published and then dropped back to near the short options strike prices, allowing me to exit at 29.5% of maximum potential profit.
Shares showed a net rise of 0.8% over one day, or a +288% annual rate. The options position produced a 41.9% yield on debit for a +15,306% annual rate.
CVX publishes earnings on Friday before the opening 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 20%, which is 1.9 times the VIX, a measure of the volatility of the S&P 500 index.
CVX’s IV stands in the 51st percentile of its annual range and the 78th percentile of its most recent broad movement.
The price used for analysis was $105.64.
The premium is 44% of the width of the position’s wings.
The risk/reward ratio is 13:1.
Decision for My Account
I have entered a position on CVX as described above. The stock at the time of entry was priced at $105.63.
By Tim Bovee, Portland, Oregon, April 27, 2017