Dollar General Corp. (DG)
Update 6/2/2017: DG gapped to the upside after earnings were published and continued to rise the next day. I took the loss with a week left before expiration.
Shares rose b7 9.3% over two days, or a +1,699% annual rate. The options position produced a -37.7% loss on debit for a -6,888% annual rate.
DG publishes earnings on Thursday before the opening bell.
I shall use options that trade for the last time nine days hence, on June 9.
Implied volatility stands at 32%, which is 2.9 times the VIX, a measure of the volatility of the S&P 500 index.
DG’s IV stands in the 63rd percentile of its annual range and the 98th percentile of its most recent broad movement.
The price used for analysis was $71.84.
The premium is 50% 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 DG as described above. The stock at the time of entry was priced at $71.86
By Tim Bovee, Portland, Oregon, May 31, 2017