Nordstrom Inc. (JWN)
Update 5/15/2017: JWN declined sharply after earnings were published and gapped down further after earnings were published. I exited the position for a $7.11 debit.
Shares declined by 15.3% over five days, or a -1,116% annual rate. The options position produced a -51.6% loss on debit for a -3,768% annual rate.
JWN publishes earnings on Thursday after the closing bell.
I shall use the series of weekly options that trade for the last time nine days hence, on May 19.
Implied volatility stands at 46%, which is 4.6 times the VIX, a measure of the volatility of the S&P 500 index.
JWN’s IV stands in the 63rd percentile of its annual range and the 97th percentile of its most recent broad movement.
The price used for analysis was $49.47.
The premium is 55% of the width of the position’s wings.
The risk/reward ratio is 1.2:1.
Decision for My Account
The options grid was lacking a strike price around the 10 delta level of the calls, so I was forced to shorten the call wing a bit. Nonetheless, I have entered a positIon on WFM as described above. The stock at the time of entry was priced at $49.46.
By Tim Bovee, Portland, Oregon, May 10, 2017