Microsoft Corp. (MSFT)
Update 4/28/2017: MSFT rose beyond the profit zone after earning were published but quickly dropped back, allowing me to exit at 52.8% of maximum potential profit.
Shares showed a net rise of 0.7% over one day, or a +264% annual rate. The options position produced a 111.7% yield on debit for a +40,758% annual rate
MSFT 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 23%, which is 2.1 times the VIX, a measure of the volatility of the S&P 500 index.
MSFT’s IV stands in the 65th percentile of its annual range and the 88th percentile of its most recent broad movement.
The price used for analysis was $67.78.
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 MSFT as described above. The stock at the time of entry was priced at $67.86.
By Tim Bovee, Portland, Oregon, April 27, 2017