MSFT Analysis

Microsoft Corp. (MSFT)

Update 7/21/2017: MSFT shares rose and then declined after earnings were published, and I exited a 58.9% of maximum potential profit.

Shares rose by a net 1.6% over the four days I held the position, or a +144% annual rate. The options position produced a +58.9% yield on debit for a +5,371% annual rate.


MSFT publishes earnings on Thursday after the closing bell.

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

Implied volatility stands at 24%, which is 2.5 times the VIX, a measure of the volatility of the S&P 500 index.

MSFT’s IV stands in the 74th percentile of its annual range and the 89th percentile of its most recent broad movement.

The price used for analysis was $73.03.

Premium: $2.78 Expire OTM  
MSFT-iron fly Strike Odds Delta
Long 78.50 92.2% 9
Break-even 75.78
Short 73.00 50.8% 51
Puts
Short 73.00 49.2% 49
Break-even 70.28
Long 67.50 90.1% 9

The premium is 51% 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 MSFT as described above. The stock at the time of entry was priced at $73.02.

By Tim Bovee, Portland, Oregon, July 17, 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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