Campbell Soup Co. (CPB)
Update 5/30/2017: CPB whipsawed after earnings were published, quickly declining from my entry point and then reversing to climb above my entry point. It then fell again, and I exited at about the point where I entered, at . Time decay took care of the work of producing a profit of 24.9% of its potential maximum.
Shares showed a net rise of 0.8% over 12 days, or a +23% annual rate. The options position produced a +33.2% yield on debit for a +1,008% annual rate.
CPB publishes earnings on Friday before the opening bell.
I shall use the series of monthly options that trade for the last time 29 days hence, on June 16.
Implied volatility stands at 23%, which is 1.5 times the VIX, a measure of the volatility of the S&P 500 index.
CPB’s IV stands in the 55th percentile of its annual range and the 89th percentile of its most recent broad movement.
The price used for analysis was $57.45.
The premium is 47% 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 CPB as described above. The stock at the time of entry was priced at $57.46.
By Tim Bovee, Portland, Oregon, May 18, 2017