EXPE Analysis

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.

Premium: $6.64 Expire OTM  
EXPE-iron fly Strike Odds Delta
Long 148.00 89,6% 12
Break-even 143.64
Short 137.00 53.5% 49
Short 137.00 46.4% 51
Break-even 130.64
Long 124.00 88.8% 10

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

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