JD Analysis

JD.com Inc. (JD)

Update 8/14/2017: JD’s earnings came short of meeting expectations: The consensus estimate was $0.11 per share; the actual was $0.10. Shares declined by $3 and then rose by $3.50, and then fell to tracing out an intra-day triangle. I exited for a profit at my target, at 24.9% of maximum potential profit, with shares at $44.75, and the options position cost a $2.80 debit to buy back.

Shares declined by a net 1.6% over my three-day holding period, or a -198% annual rate. The options position produced a 33.2% yield on debit for a +4,041% annual rate.

JD publishes earnings on Monday before the opening bell.

I shall use options that trade for the last time 14 days hence, on Aug. 25.

Implied volatility stands at 48%, which is 3.2 times the VIX, a measure of the volatility of the S&P 500 index.

JD’s IV stands in the 93rd percentile of its annual range and the 95th percentile of its most recent broad movement.

The price used for analysis was $45.64.

Premium: $3.73 Expire OTM  
JD-iron fly Strike Odds Delta
Long 53.50 92.2% 10
Break-even 49.73 ~73.0% ~31
Short 46.00 55.4% 49
Short 46.00 44.7% 51
Break-even 42.23 ~72.7% ~34
Long 38.50 89.6% 8

The premium is 50% of the width of the position’s wings.

The risk/reward ratio is 1:1.

Decision for My Account

I have entered an order on JD as described above. The stock at the time of entry was priced at $45.49.

By Tim Bovee, Portland, Oregon, Aug. 11, 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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