OAS Analysis

Oasis Petroleum Inc. (OAS)

Update 5/12/2017: OAS rose after earnings were published and then moved sideways. I found it difficult in repeated attempts to get a fill, even when my bid was beyond the midpoint toward the ask side of the bid/ask spread. As expiration approached I decided to meet the ask of $0.77, even though it meant exiting at 14.4% of maximum potential profit, below my target.

Shares declined by 2.5% over four days, or a -229% annual rate. The options position produced a +16.9% yield on debit for a +1,541% annual rate


OAS publishes earnings on Monday after the closing bell.

I shall use the series of weekly options that trade for the last time 11 days hence, on May 19.

Implied volatility stands at 59%, which is 6.1 times the VIX, a measure of the volatility of the S&P 500 index.

OAS’s IV stands in the 38th percentile of its annual range and the 59th percentile of its most recent broad movement.

The price used for analysis was $12.14.

Premium: $0.90 Expire OTM  
OAS-iron fly Strike Odds Delta
Calls
Long 14.00 92.5% 10
Break-even 12.90
Short 12.00 46.9% 57
Puts
Short 12.00 52.6% 43
Break-even 10.90
Long 10.00 89.0% 8

The premium is 45% of the width of the position’s wings.

The risk/reward ratio is 1.2:1.

Decision for My Account

I have entered a position on OAS as described above. The stock at the time of entry was priced at $12.16.

By Tim Bovee, Portland, Oregon, May 8, 2017

5 thoughts on “OAS Analysis

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