JKS Analysis

JinkoSolar Co. Ltd. (JKS)

Update 6/7/2017; JKS fell sharply in the week prior to earnings and then began to rise in the few days after the announcement. I exited at 39.5% of maximum potential profit.

Shares showed a net decline of 3.2% over the five days I held the position, or a -232% annual rate. The options position produced a +62.7% yield on debit for a +4,578% annual rate.

JKS publishes earnings on Monday before the opening bell.

I shall use options that trade for the last time 14 days hence, on June 16.

Implied volatility stands at 57%, which is 5.8 times the VIX, a measure of the volatility of the S&P 500 index.

JKS’s IV stands in the 39th percentile of its annual range and the 90th percentile of its most recent broad movement.

The price used for analysis was $18.61.

Premium: $0.96 Expire OTM  
JKS-iron condor Strike Odds Delta
Long 21.00 84.0% 19
Break-even 19.96
Short 19.00 59.6% 45
Short 18.00 56.4% 38
Break-even 16.96
Long 16.00 82.9% 14

The premium is 48% 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 JKS as described above. The stock at the time of entry was priced at $18.59.

The grid forced me to truncate the wings a bit compared to my usual preference, but the premium was sufficiently high compared to the wing width to justify the trade, and the risk/reward ratio was low compared to most iron condors.

By Tim Bovee, Portland, Oregon, June 2, 2017


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