PG Analysis

The Procter & Gamble Co. (PG)

Update 7/27/2017: PG declined after earnings were published and then reversed course to the upside, allowing me to exit with little difference in the stock price compared to entry but with 22.5% of maximum potential profit.

Shares rose by 0.3% over the 24 hours I held the position, a 94% annual rate. The options position produced a 29.0% yield on debit for a +10,572% annual rate.

PG publishes earnings on Thursday before the opening bell.

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

Implied volatility stands at 18%, which is 1.9 times the VIX, a measure of the volatility of the S&P 500 index.

PG’s IV stands in the 49th percentile of its annual range and at the peak of its most recent broad movement.

The price used for analysis was $89.02.

Premium: $1.87 Expire OTM  
PG-iron fly Strike Odds Delta
Long 94.00 90.3% 10
Break-even 183.00
Short 89.00 49.8% 52
Short 89.00 51.2% 48
Break-even 86.87
Long 85.00 89.1% 11

The premium is 42% of the width of the position’s wings.

The risk/reward ratio is 1.2:1.

Decision for My Account

I have entered an order on PG as described above. The stock at the time of entry was priced at $89.13.

By Tim Bovee, Fukuoka, Japan, July 26, 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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