TRIP Analysis

TripAdvisor Inc. (TRIP)

Update 8/9/2017: TRIP gapped up by $4 immediately after earnings were published, fell by $8 and then recovered by $4, ending up about where it had closed the day before earnings. I exited a bit below target, at $2.48, or 21.3% of maximum potential profit.

Shares showed a net decline of -8.25 over the day I held the position, or a -2,978% annual rate. The options position produced a 27.0% yield on debit for a +9,861% annual rate.

TRIP publishes earnings on Tuesday after the closing bell.

I shall use options that trade for the last time 10 days hence, on Aug. 18.

Implied volatility stands at 55%, which is 5.6 times the VIX, a measure of the volatility of the S&P 500 index.

TRIP’s IV stands in the 96th percentile of its annual range and the 93rd percentile of its most recent broad movement.

The price used for analysis was $39.14.

Premium: $3.15 Expire OTM  
TRIP-iron fly ` Odds Delta
Long 46.00 89.2% 14
Break-even 42.15 ~71.6% 33
Short 39.00 51.1% 54
Short 39.00 48.4% 46
Break-even 35.15 ~77.9% 18
Long 32.00 91.2% 7

The premium is 45% 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 TRIP as described above. The stock at the time of entry was priced at $39.34.

By Tim Bovee, Portland, Oregon, Aug. 8, 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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