SINA Analysis


Update 5/17/2017: SINA gapped sharply to the upside immediately after earnings were published, retracing a portion of the rise the day after, allowing for a slightly improved, although still losing, exit at a $10.20 debit.

Shares showed a net rise of 7.6% over two days, or a +1,395% annual rate. The options position produced a -37.9% loss on debit for a -6,924% annual rate.

SINA publishes earnings on Tuesday before the opening bell.

I shall use the series of monthly options that trade for the last time 32 days hence, on June 16.

Implied volatility stands at 41%, which is four times the VIX, a measure of the volatility of the S&P 500 index.

SINA’s IV stands in the 57th percentile of its annual range and at the peak of its most recent broad movement.

The price used for analysis was $83.10.

Premium: $6.33 Expire OTM  
SINA-iron fly Strike Odds Delta
Long 95.00 88.7% 14
Break-even 68.83
Short 62.50 48.7% 56
Short 62.50 50.8% 44
Break-even 78.83
Long 72.50 72.5 12

The premium is 56% of the width of the position’s wings.

The risk/reward ratio is 1:1.

Decision for My Account

I have entered a position on SINA as described above. The stock at the time of entry was priced at $83.12.

By Tim Bovee, Portland, Oregon, May 15, 2017

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