CBS Analysis

CBS Corp. (CBS)

Update 8/9/2017: CBS whipsawed across a $4 span in two days after earnings were published. I exited at 25.7% of maximum potential profit.

Shares showed a net rise of 0.8% over my two-day holding period, or a +138% annual rate. The options position produced a 34.5% yield on debit for a +6,296% annual rate.

CBS 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 31%, which is triple the VIX, a measure of the volatility of the S&P 500 index.

CBS’s IV stands in the 70th percentile of its annual range and the 80th percentile of its most recent broad movement.

The price used for analysis was $63.50.

Premium: $2.69 Expire OTM  
CBS-iron fly ` Odds Delta
Long 69.00 91.9% 9
Break-even 66.19 ~75.7% 26
Short 63.50 51.4% 51
Short 63.50 48.5% 49
Break-even 60.69 ~71.2% 27
Long 58.00 88.9% 10

The premium is 49% 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 CBS as described above. The stock at the time of entry was priced at $63.52.

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