KORS Analysis

Michael Kors Holdings Inc. (KORS)

Update 6/2/2017: KORS gapped to the downside after earnings were published and then moved sideways. I judged that there was little chance of an improvement in the week before expiration and took the loss.

Shares declined by 8.3% over three days, or a -1,011% annual rate. The options position produced a 7.0% annual rate for a -647.98% annual rate.

KORS publishes earnings on Wednesday before the opening bell.

I shall use options that trade for the last time 10 days hence, on June 9.

Implied volatility stands at 49%, which is 4.7 times the VIX, a measure of the volatility of the S&P 500 index.

KORS’s IV stands in the 79th percentile of its annual range and at the peak of its most recent broad movement.

The price used for analysis was $36.05.

Premium: $3.07 Expire OTM  
KORS-iron fly Strike Odds Delta
Long 42.00 87.9% 15
Break-even 39.57
Short 36.50 54.1% 50
Short 36.50 45.9% 49
Break-even 34.07
Long 31.00 86.4% 11

The premium is 56% of the width of the position’s wings.

The risk/reward ratio is 0.8:1.

Decision for My Account

I have entered an order on KORS as described above. The stock at the time of entry was priced at $36.28.

By Tim Bovee, Portland, Oregon, May 30, 2017

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