CRM Analysis Inc. (CRM)

Update 5/19/2017: CRM rose sharply after earnings were published and then fell back for a partial retracement. I exited for a debit of  $3.17, or 28.8% of maximum potential profit.

Shares at exit had risen by 2.3% compared to my entry into the position the day beofre, or a +839% annual rate. The optoins position produced a 40.4% yield on debit for a +14,738% annual rate.

CRM publishes earnings on Thursday after the closing bell.

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

Implied volatility stands at 34%, which is 2.2 times the VIX, a measure of the volatility of the S&P 500 index.

CRM’s IV stands in the 61st percentile of its annual range and the 91st percentile of its most recent broad movement.

The price used for analysis was $87.62.

Premium: $4.45 Expire OTM  
CRM-iron fly Strike Odds Delta
Long 97.00 92.2 9
Break-even 91.95
Short 87.50 49.4% 53
Short 87.50 50.6% 47
Break-even 83.45
Long 79.00 91.2% 8

The premium is 49% of the width of the position’s wings.

The risk/reward ratio is 1.1:1.

Decision for My Account

I have entered an order on CRM as described above. The stock at the time of entry was priced at $87.72.

By Tim Bovee, Portland, Oregon, May 18, 2017

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