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.

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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
Puts
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