Expedia Inc. (EXPE)
Update 4/28/2017: EXPE fell after earnings were published and I exited at 25.5% of maximum potential profit.
Shares declined by 2.5% over one day, or a -964% annual rate. The options position produced a +34.1% yield on debit for a +12,462% annual rate.
EXPE 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.
EXPE’s IV stands in the 47th percentile of its annual range and the 87th percentile of its most recent broad movement.
The price used for analysis was $136.51.
The premium is 54% of the width of the position’s wings.
The risk/reward ratio is 1:1.
Decision for My Account
I have entered a position on EXPE. The stock at the time of entry was priced at $136.49.
By Tim Bovee, Portland, Oregon, April 27, 2017