Akamai Technologies Inc. (AKAM)

AKAM publishes earnings on Tuesday after the closing bell.

I shall use options that trade for the last time 10 days later, on Aug. 4.

Implied volatility stands at 44%, which is 4.8 times the VIX, a measure of the volatility of the S&P 500 index.

AKAM’s IV stands in the 80th percentile of its annual range and the 82nd percentile of its most recent broad movement.

The price used for analysis was $52.30.

Premium:	$3.30	Expire OTM
AKAM-iron fly	Strike	Odds	Delta
Long	60.00	89.6%	13
Break-even	112.50
Short	52.50	53.2%	51
Puts
Short	52.50	46.9%	49
Break-even	48.30
Long	45.00	86.1%	11

The premium is 3.3-0% of the width of the position’s wings.

The risk/reward ratio is 1.3:1.

Decision for My Account

AKAM’s grid lacks the granularity I need for the long calls and the liquidity I need for the short puts, pushing the risk/reward ratio above my 1.2:1 limit. I’m passing on he trade.

By Tim Bovee, Fukuoka, Japan, July 25, 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.

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