KSS Analysis

Kohl’s Corp. (KSS)

Update 8/14/2017: KSS’s earnings came in at $1.24 per share, well below the $1.86 expected by the Street. Shares declined by by $4 the session after earnings were published and then immediately moved upward by $3.50 before slipping again to the downside. I exited about $1.20 above the low, at $38.71 per share.

Shares declined by 8.7% over my five-day holding period, or a -637% annual rate. The options position produced a -17.9% loss on debit for a -1,308% annual rate.

KSS had 2.82% score on the Zacks Investment Research earnings surprise predictor, providing before the fact evidence (perhaps) that the trade ought to have been passed.

I would have exited at a $3.35 debit had I done so the session after earnings were published. Continuing to hold added an additional 50 cents to the debit, and I exited at $3.85.

KSS publishes earnings on Thursday before the opening bell.

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

Implied volatility stands at 48%, which is four times the VIX, a measure of the volatility of the S&P 500 index.

KSS’s IV stands in the 89th percentile of its annual range and at the peak of its most recent broad movement.

The price used for analysis was $42.60.

Premium: $3.16 Expire OTM  
KSS-iron fly Strike Odds Delta
Long 49.00 90.8% 11
Break-even 45.66 ~76.6% ~27
Short 42.50 53.4% 51
Short 42.50 46.8% 49
Break-even 39.16 ~75.2% ~21
Long 36.00 90.7% 7

The premium is 50% 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 KSS as described above. The stock at the time of entry was priced at $42.41.

By Tim Bovee, Portland, Oregon, Aug. 9, 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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