HP Inc. (HPQ)
Update 5/25/2017: HPQ whipsawed after earnings were published, rising and then declining over a 5% range. The price was close to my entry price when I exited, at 44.9% of maximum potential profit.
Shares had risen by 0.8 since I entered the prior day, or a +298% annual rate.The options position produced a +81.5% yield on debit for a +29,762% annual rate.
HP publishes earnings on Wednesday after the closing bell.
I shall use the series of monthly options that trade for the last time nine days hence, on June 2.
Implied volatility stands at 39%, which is 3.7 times the VIX, a measure of the volatility of the S&P 500 index.
HP’s IV stands in the 91st percentile of its annual range and at the peak of its most recent broad movement.
The price used for analysis was $18.99.
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 an order on HP as described above. The stock at the time of entry was priced at $19.01.
By Tim Bovee, Portland, Oregon, May 24, 2017