PAYX Analysis

Paychex Inc. (PAYX)

Update 6/28/2017: PAYX gapped to the downside by about $2 after earnings were published, and then rose to regain about half of the decline. I exited at 25% of maximum potential profit, my target.

Shares showed a net decline of 2.2% over my holding period of less than a day, or a -787% annual rate. The options position produced a +33.3% yield on debit for a +12,167% annual rate.

PAYX publishes earnings on Thursday before the opening bell.

I shall use options that trade for the last time 24 days hence, on July 21.

Implied volatility stands at 24%, which is 2.2 times the VIX, a measure of the volatility of the S&P 500 index.

PAYX’s IV stands in the 81st percentile of its annual range and the 89th percentile of its most recent broad movement.

The price used for analysis was $58.65.

Premium: $2.64 Expire OTM  
PAYX-iron fly Strike Odds Delta
Long 62.50 86.3% 15
Break-even 60.14
Short 57.50 40.3% 62
Short 57.50 60.7% 38
Break-even 55.14
Long 52.50 93.6% 6

The premium is 53% 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 PAYX as described above. The stock at the time of entry was priced at $58.63.

By Tim Bovee, Portland, Oregon, June 27, 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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