DRI Analysis

Darden Restaurants Inc. (DRI)

Update 6/27/2017: DRI gapped to the upside after earnings were published but quickly shrinking the chasm to below $3. I exited at 24.9% of maximum potential profit.

Shares showed a net rise of 3.3% over my holding period of a bit less than 24 hours, or a +1,185% annual rate. The options positoin produced a 33.2% yield on debit for a +12,108% annual rate.


DRI publishes earnings on Tuesday before the opening bell.

I shall use options that trade for the last time 25 days hence, on July 21.

Implied volatility stands at 37%, which is 3.8 times the VIX, a measure of the volatility of the S&P 500 index.

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

The price used for analysis was $89,96.

Premium: $5.50 Expire OTM  
DRI-iron fly Strike Odds Delta
Long 100.00 88.8% 13
Break-even 95.50
Short 90.00 53.3% 50
Puts
Short 90.00 46.7% 49
Break-even 85.50
Long 80.00 82.8% 14

The premium is 55% of the width of the position’s wings.

The risk/reward ratio is 0.8:1.

Decision for My Account

Despite a relatively narrow selection of strike prices, I have entered an order on DRI as described above. The stock at the time of entry was priced at $89.83.

By Tim Bovee, Portland, Oregon, June 26, 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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