HPQ Analysis

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.

Premium: $1.18 Expire OTM  
HPQ-iron fly Strike Odds Delta
Long 21.50 91.0% 11
Break-even 20.18
Short 19.00 51.9% 52
Short 19.00 48.1% 48
Break-even 17.68
Long 16.50 89.2% 9

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

2 thoughts on “HPQ Analysis

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