COTY Analysis

Coty Inc. (COTY)

Update 8/24/2017; COTY missed earnings expectations, coming in at $0.63 as opposed to the consensus $0.75. Shares fell $3+ and zig-zagged for two days. I exited on the third day for a loss.

Shares declined by 13.4% over three days, or a -1,631% annual rate. The options position produced a 46.8% loss for a -5,699% annual rate.

COTY publishes earnings on Tuesday before the opening bell.

I shall use options that trade for the last time 11 days hence, on Sept. 1.

Implied volatility stands at 44%, which is 3.2 times the VIX, a measure of the volatility of the S&P 500 index.

COTY’s IV stands in the 88th percentile of its annual range and at the peak of its most recent broad movement.

The price used for analysis was $19.08.

Premium: $1.41 Expire OTM  
COTY-iron fly Strike Odds Delta
Long 22.00 86.7% 16
Break-even 20.41 ~77.0% ~26
Short 19.00 50.0% 54
Short 19.00 49.8% 46
Break-even 17.41 ~77.0% ~20
Long 16.00 89.3% 8

The expected move is $1.32, within the $1.50 break-even width.

The risk/reward ratio is 1.3:1.

Decision for My Account

I have entered an order on COTY as described above. The stock at the time of entry was priced at $19.10.

By Tim Bovee, Portland, Oregon, Aug. 21, 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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