JWN Analysis

Nordstron Imc. (JWN)

JWN publishes earnings on Thursday after the closing bell.

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

Implied volatility stands at 48%, which is 3.5 times the VIX, a measure of the volatility of the S&P 500 index.

JWN’s IV stands in the 72nd percentile of its annual range and at the peak of its most recent broad movement.

The price used for analysis was $46.20.

Premium: $3.55 Expire OTM  
JWN-iron fly Strike Odds Delta
Long 52.50 91.0% 12
Break-even 51.05 ~78.8% ~24
Short 47.50 62.8% 41
Puts
Short 47.50 37.0% 59
Break-even 43.55 ~76.0% ~21
Long 40.00 88.3% 10

The premium is 57% of the width of the position’s wings.

The risk/reward ratio is 1.1:1.

Decision for My Account

I like to have the short wings with 5 delta of 50 — i.e., between 45 delta and 55 delta. That’s not possible with this options grid. For that reason I’m passing on JWM.

By Tim Bovee, Portland, Oregon, Aug. 10, 2017

Disclaimer

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.

License
Creative Commons License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

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