M Analysis

Macy’s Inc. (M)

Update 8/10/2017: M whipsawed up then down after earnings were published, recovering a portion of the decline. I exited the roller coaster ride at 29.5% of maximum potential profit.

Shares showed a net declined of -4.1% over my one-day holding period, or a -1,488% annual rate. The options position produced a +41.3% yield on debit for a +15,268% annual rate.

M 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 57%, which is 4.7 times the VIX, a measure of the volatility of the S&P 500 index.

M’s IV stands in the peak of its annual range and its most recent broad movement.

The price used for analysis was $23.53.

Premium: $2.17 Expire OTM  
M-iron fly Strike Odds Delta
Long 28.00 91.3% 11
Break-even 25.67 ~75.1% ~29
Short 23.50 51.9% 53
Short 23.50 48.1% 47
Break-even 21.17 ~78.1% ~18
Long 19.00 91.2% 7

The premium is 48% 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 M as described above. The stock at the time of entry was priced at $23.58.

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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