KORS Analysis

Michael Kors Holdings Ltd. (KORS)

Update 8/14/2017: KORS shares by $8 after earnings came in at $0.80 per share, above the $0.63 Street number. The stock traded sideways for four subsequent days.

Shares rose by 21.3% over my seven-day holding period, or a +1,112% annual rate. The options position produced a -50.1% loss on debit for a -2,611% annual rate.

I would have paid a debit of  $5.23 had I exited the position the session after earnings were published. Waiting cost me an additional $0.84 as I exited for a $6.07 debit. In this case the waiting tactic did not mitigate the loss.

KORS 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 47%, which is 4.6 times the VIX, a measure of the volatility of the S&P 500 index.

KORS’ IV stands in the 77th percentile of its annual range and the 96th percentile of its most recent broad movement.

The price used for analysis was $37.47.

Premium: $3.03 Expire OTM  
KORS-iron fly ` Odds Delta
Long 43.50 89.8% 13
Break-even 40.53 ~77.4% ~26
Short 37.50 92.2% 52
Short 37.50 47.8% 48
Break-even 34.53 ~72.8% ~23
Long 31.50 89.4% 8

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 KORS as described above. The stock at the time of entry was priced at $37.56.

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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