Big Lots Inc. (BIG)
Update 5/26/2017: BIG rose sharply to the upside after earnings were published and then whipsawed, giving most of the gain back. I exited at 24.9% of maximum potential profit.
From entry the day before to exit, shares produced at net rise of 0.4%, or a +128% annual rate. The options position produced a 33.2% yield on debit for a +12,122% annual rate.
BIG publishes earnings on Friday before the opening bell.
I shall use the series of monthly options that trade for the last time 22 days hence, on June 16.
Implied volatility stands at 43%, which is 4.3 times the VIX, a measure of the volatility of the S&P 500 index.
BIG’s IV stands in the 67th percentile of its annual range and the 98th percentile of its most recent broad movement.
The price used for analysis was $48.22.
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 BIG as described above. The stock at the time of entry was priced at $48.30.
By Tim Bovee, Portland, Oregon, May 25, 2017