Pandora Media Inc. (P)
Update 5/9/2017: P declined sharply immediately after earnings were published and I exited at 31.8% of maximum potential profit.
Shares declined by 2.0% over one day, or a -742% annul rate. The options position produced a 48.7% yield on debit for a +17,033% annual rate.
P 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 54%, which is 6.6 times the VIX, a measure of the volatility of the S&P 500 index.
P’s IV stands in the 51st percentile of its annual range and the 66th percentile of its most recent broad movement.
The price used for analysis was $10.55.
The premium is 49% of the width of the position’s wings.
The risk/reward ratio is 1.3:1.
Decision for My Account
I have entered a position on P as described above. The stock at the time of entry was priced at $10.55.
By Tim Bovee, Portland, Oregon, May 8, 2017