TGT Analysis

Target Corp. (TGT)

Update 5/17/2017: TGT rose sharply after earnings were published and rapidly declined to near where it closed the day before, allowing for an exit at a debit of $2.07, or 31.1% of maximum potential profit.

Shares produced a net rise of 2.1% in a day, or a +757% annual rate. The options position produced a 45.2% yield on debit for a +16,478% annual rate.

TGT publishes earnings on Wednesday before the opening bell.

I shall use the series of monthly options that trade for the last time 10 days hence, on May 26.

Implied volatility stands at 33%, which is 3.1 times the VIX, a measure of the volatility of the S&P 500 index.

TGT’s IV stands at the peak of both its annual range and the its most recent broad movement.

Note: The previously posted analysis was done on the monthlys grid expiring June 16. This trade, on the May 26 weeklys, provides a much improved result.

The price used for analysis was $54.61.

Premium: $2.99 Expire OTM  
TGT-iron fly Strike Odds Delta
Long 60.50 91.7% 10
Break-even 57.49
Short 54.50 52.0% 51
Short 55.00 48.0% 49
Break-even 51.49
Long 48.50 91.9% 7

The premium is 48% 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 TGT as described above. The price at the time of entry was $54.50

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

2 thoughts on “TGT Analysis

Comments are closed.