USB Analysis

U.S. Bancorp (USB)

USB publishes earnings on Wednesday before the opening bell.

I shall use options that trade for the last time 10 days later, on July 28.

Implied volatility stands at 25%, which is 2.6 times the VIX, a measure of the volatility of the S&P 500 index.

USB’s IV stands in the 96th percentile of its annual range and the 91st percentile of its most recent broad movement.

The price used for analysis was $51.86.

Premium: $1.28 Expire OTM  
USB-iron fly Strike Odds Delta
Long 55.00 94.8% 6
Break-even 53.28
Short 52.00 54.2% 47
Short 52.00 45.7% 53
Break-even 50.28
Long 49.00 87.6% 11

The premium is 43% of the width of the position’s wings.

The risk/reward ratio is 1.3:1.

Decision for My Account

The risk/reward ratio is slightly higher than my guidelines, and I shall pass on this trade. It’s not an awful trade by any means, but with earnings season washing in I have plenty of trades to choose from.

By Tim Bovee, Portland, Oregon, July 14, 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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