CAR Analysis

Avis Budget Group Inc. (CAR)

Update 8/8/2017: CAR zig-zagged within a $4 span for two days after earnings were published, finally settling into a sideways pattern below the pre-earnings close. I exited at 25.9% of maximum potential profit.

Shares showed a net decline in my holding period of -3.4% over two days, or a -617% annual rate. The options position produced a 35.05 yield on debit for a +6,301% annual rate.


CAR publishes earnings on Monday after the closing bell.

I shall use options that trade for the last time 11 days hence, on Aug. 18.

Implied volatility stands at 68%, which is 6.7 times the VIX, a measure of the volatility of the S&P 500 index.

CAR’s IV stands in the 88th percentile of its annual range and the 84th percentile of its most recent broad movement.

The price used for analysis was 32.61.

Premium: $3.20 Expire OTM  
CAR-iron fly Strike Odds Delta
Long 39.00 91.3% 11
Break-even 36.20 ~77.5% 27
Short 33.00 55.1% 51
Puts
Short 33.00 44.9% 49
Break-even 30.20 ~68.4% 26
Long 27.00 88.6% 10

The premium is 53% of the width of the position’s wings.

The risk/reward ratio is 0.9:1.

Decision for My Account

I have entered an order on CAR as described above. The stock at the time of entry was priced at $32.73.

By Tim Bovee, Portland, Oregon, Aug. 7, 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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