JACK Analysis

Jack in the Box Inc. (sym)

Update 5/17/2017: JACK gapped sharply to the upside and then retraced part of the rise. I exited for a loss with a debit of $9.50.

Shares produced a net rise of 7.6% over a day, or a +2,789% annual rate. The options position produced a -24.7% loss on debit for a -9,029% annual rate.

JACK publishes earnings on Tuesday after the closing bell.

I shall use the series of monthly options that trade for the last time 31 days hence, on June 16.

Implied volatility stands at 37%, which is 3.6 times the VIX, a measure of the volatility of the S&P 500 index.

JACK’s IV stands in the 78th percentile of its annual range and the 91st percentile of its most recent broad movement.

The price used for analysis was $101.32.

Premium: $7.15 Expire OTM  
JACK-iron fly Strike Odds Delta
Long 115.00 90.1% 12
Break-even 107.15
Short 100.00 47.1% 57
Short 100.00 52.4% 43
Break-even 97.15
Long 90.00 84.39 13

The premium is 57% of the width of the position’s wings.

The risk/reward ratio is 1.1:1.

Decision for My Account

I have entered a position on JACK as described above. The stock at the time of entry was priced at $101.35.

By Tim Bovee, Portland, Oregon, May 16, 2017

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