Analog Devices Inc. (ADI)
Update 5/31/2017: ADI gapped to the upside after earnings were published and the pulled back. I exited at 27.1% of maximum potential profit.
Shares produced a net rise of 1.9% over one day, or a +692% annual rate. The options position produced a 37.2% yield on debit for a +13,586% annual rate.
ADI publishes earnings on Wednesday before the opening bell.
I shall use options that trade for the last time 17 days hence, on June 16.
Implied volatility stands at 32%, which is 3.1 times the VIX, a measure of the volatility of the S&P 500 index.
ADI’s IV stands in the 65th percentile of its annual range and the 80th percentile of its most recent broad movement.
The price used for analysis was $84.93.
The premium is 62% of the width of the position’s wings.
The risk/reward ratio is 1:1.
Decision for My Account
I have entered an order on ADI as described above. The stock at the time of entry was priced at $84.97.
By Tim Bovee, Portland, Oregon, May 30, 2017