Starbucks Corp. (SBUX)
Update 4/28/2017: SBU gapped sharply to the downside and then rose, retracing about 38% of the loss. I exited at 25.2% of maximum potential profit.
Shares showed a net decline of 2.9% over one day, or a -1,075% annual rate. The options position produced a 33.8% yield on debit for a +12,319% annual rate.
SBUX 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.
SBUX’s IV stands in the 51st percentile of its annual range and the 89th percentile of its most recent broad movement.
The price used for analysis was $61.55.
The premium is 54% of the width of the position’s wings.
The risk/reward ratio is 0.9:1.
Decision for My Account
I have entered a position on SBUX as described above. The stock at the time of entry was priced at $61.61.
By Tim Bovee, Portland, Oregon, April 27, 2017