MSFT Analysis

Microsoft Corp. (MSFT)

Update, June 26, 2017: MSFT traded largely within a range after I entered the position, opening higher today but quickly dropping back within the range. I exited at 6.6% of maximum potential profit.

Shares rose by 0.9% over six days, or a +55% annual rate. The options position produced a +7.0% yield on debit for a +428% annual rate.

MSFT has sufficiently high implied volatility to qualify for analysis and possibly a trade.

I shall use options that trade for the last time 10 days hence, on June 30.

Implied volatility stands at 23%, which is 2.2 times the VIX, a measure of the volatility of the S&P 500 index.

MSFT’s IV stands in the 68th percentile of its annual range and the 91st percentile of its most recent broad movement.

The price used for analysis was $70.16.

Premium: $1.37 Expire OTM  
MSFT-iron fly Strike Odds Delta
Long 73.00 92.9% 8
Break-even 71.37
Short 70.00 48.0% 53
Short 70.00 51.5% 47
Break-even 68.37
Long 67.00 89.7% 10

The premium is 46% of the width of the position’s wings.

The risk/reward ratio is 1.2:1.

Decision for My Account

I have entered an order on MSFT as described above. The stock at the time of entry was priced at $70.16.

By Tim Bovee, Portland, Oregon, June 20, 2017


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.

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