Wix.com (WIX)
WIX publishes earnings on Wednesday before the opening bell.
I shall use the series of weekly options that trade for the last time 10 days hence, on May 19.
Implied volatility stands at 89%, which is 9.1 times the VIX, a measure of the volatility of the S&P 500 index.
WIX’s IV stands in the 94th percentile of its annual range and the 93rd percentile of its most recent broad movement.
The price used for analysis was $74.00.
| Premium: | $8.95 | Expire OTM | |
| WIX-iron fly | Strike | Odds | Delta |
| Calls | |||
| Long | 100.00 | 95.4% | 7 |
| Break-even | 83.95 | ||
| Short | 75.00 | 58.3% | 51 |
| Puts | |||
| Short | 75.00 | 42.0% | 50 |
| Break-even | 63.95 | ||
| Long | 55.00 | 90.7% | 6 |
The premium is 40% of the width of the position’s wings.
The risk/reward ratio is 1.5:1.
Decision for My Account
The risk/reward ratio is greater than I like, and the super-high volatility makes the minimum cost of a spread of the sort I prefer more expensive that I would like if things move against me. I am passing on the WIX trade.
By Tim Bovee, Portland, Oregon, May 9, 2017
Tim Bovee, Private Trader 
[…] analyzed WIX but declined to take the […]
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