THC Analysis

Tenet Healthcare Corp. (THC)

Update 8/8/2017: THC fell by $2 after earnings were published, recovered about half in early trading and then fell back. I exited at 18% of maximum potential profit, less than my 25% target, in order to clear room in the account for another trade.

Shares declined by 6.4% over my one-day holding period, or a -2,339.5% annual rate. Tye options position produced a 22.05 yield on debit for a +8,035% annual rate.

THC 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 76%, which is 7.4 times the VIX, a measure of the volatility of the S&P 500 index.

THC’s IV stands in the 97th percentile of its annual range and the peak of its most recent broad movement.

The price used for analysis was $16.50.

Premium: $1.94 Expire OTM  
THC-iron fly Strike Odds Delta
Long 20.50 91.3% 12
Break-even 18.44 ~76.5% ~27
Short 16.50 53.0% 53
Short 16.50 47.0% 47
Break-even 14.44 ~74.9 ~20
Long 12.50 87.8% 8

The premium is 49% of the width of the position’s wings.

The risk/reward ratio is 1.1:1.

Decision for My Account

I have entered an order on THC as described above. The stock at the time of entry was priced at $16.46.

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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