Urban Outfitters Inc. (URBN)
Update 5/17/2017: URBN fell for five days straight before earnings were published and fell again the day after. I exited at a debit of $1.26, or 40% of maximum potential profit.
Shares declined by -3.0% over one day, or a -1,086% annual rate. The options position produced a 66.7% yield on debit for a +24,333% annual rate.
URBN publishes earnings on Tuesday after the closing 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 56%, which is 5.2 times the VIX, a measure of the volatility of the S&P 500 index.
URBN’s IV stands in the 78th percentile of its annual range and at the peak of its most recent broad movement.
The price used for analysis was $20.48.
The premium is 53% 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 URBN as described above. The stock at the time of entry was priced at $20.51.
By Tim Bovee, Portland, Oregon, May 16, 2017