FNSR Analysis

Finisar Corp. (FNSR)

Update 6/19/2017: FNSR gapped sharply to the upside the trading session after earnings were published and then retraced a significant portion of that rise the next day. Rather than risk a move that would make the position unprofitable, I exited at 19.9% of maximum potential profit, which is less than my 25% target.

Shares showed a net rise of 7.5% over five days, or a +545% annual rate. The options position produced a 24.9% yield on debit for a +1,812% annual rate.


FNSR publishes earnings on Thursday after the closing bell.

I shall use options that trade for the last time 36 days hence, on July 21.

Implied volatility stands at 65%, which is 5.7 times the VIX, a measure of the volatility of the S&P 500 index.

FNSR’s IV stands in the 92nd percentile of its annual range and the 82nd percentile of its most recent broad movement.

The price used for analysis was $25.50.

Premium: $3.62 Expire OTM  
FNSR-iron fly Strike Odds Delta
Long 33.00 92.2% 11
Break-even 29.62
Short 26.00 5873.0% 49
Puts
Short 26.00 41.3% 51
Break-even 22.62
Long 19.00 89.0% 7

The premium is 52% of the width of the position’s wings.

The risk/reward ratio is 0.9:1.

Decision for My Account

I have entered an order on FNSR as described above. The stock at the time of entry was priced at $25.38.

By Tim Bovee, Portland, Oregon, June 15, 2017

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License
Creative Commons License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

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