BBBY Analysis

Bed Bath & Beyond Inc. (BBBY)

Update 6/26/2017: Shares gapped sharply to the downside after earnings were published and stayed low the next day. I exited for a loss.

Shares declined by 15.9% over four days, or a -1,451% annual rate. The options position produced a -46.6% loss on debit for a -4,252 annual rate.

BBBY publishes earnings on Thursday after the closing bell.

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

Implied volatility stands at 41%, which is 3.9 times the VIX, a measure of the volatility of the S&P 500 index.

BBBY’s IV stands at the peak of both its annual range and its most recent broad movement.

The price used for analysis was $33.92.

Premium: $2.20 Expire OTM  
BBBY-iron fly Strike Odds Delta
Long 38.50 92.6 9
Break-even 36.20
Short 34.00 52.8% 51
Short 34.00 47.2% 49
Break-even 31.70
Long 29.50 91.4% 7

The premium is 49% of the width of the position’s wings.

The risk/reward ratio is 1:1.

Decision for My Account

I have entered an order on BBBY as described above. The stock at the time of entry was priced at $33.88.

By Tim Bovee, Portland, Oregon, June 22, 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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