INFY Analysis

Infosys Ltd. (INFY)

INFY publishes earnings on Friday before the opening bell.

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

Implied volatility stands at 32%, which is 3.2 times the VIX, a measure of the volatility of the S&P 500 index.

INFY’s IV stands in the 55th percentile of its annual range and the peak of its most recent broad movement.

The price used for analysis was $15.61.

Premium: $0.40 Expire OTM  
INFY-iron condor Strike Odds Delta
Long 17.00 88.3% 13
Break-even 16.40
Short 16.00 64.0% 39
Puts
Short 15.00 68.0% 29
Break-even 14.40
Long 14.00 87.6% 11

The premium is 40% of the width of the position’s wings.

The risk/reward ratio is 1.5:1.

Decision for My Account

The placement of the at-the-money point made it impossible to construct my preferred iron fly position, so I went with an iron condor. That means a larger risk/reward ratio. The low share price means that to earn a meaningful dollar profit, I have to buy a lot of contracts, at 75 cents each for the CBOE. Bottom line: I don’t like the way this trade lines up, I don’t like the cost, and I am passing on it. No trade.

By Tim Bovee, Portland, Oregon, July 13, 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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