CRM Analysis Inc. (CRM)

Update 8/23/2017: CRM met Street expectations with earnings of 33 cents per share. The stock price fell by about a dollar and a half immediately after the earnings announcement, and then after the opening bell returned to where it had closed the night before the announcement. I exited at 42.8% of maximum potential profit.

Shares showed a net decline during my one-day holding period of 0.4%, or a -142% annual rate. The options position produced a 74.8% return for a +27,297% annual rate.

CRM publishes earnings on Tuesday after the closing bell.

I shall use options that trade for the last time 10 days hence, on Sept. 1.

Implied volatility stands at 31%, which is 2.6 times the VIX, a measure of the volatility of the S&P 500 index.

CRM’s IV stands in the 52nd percentile of its annual range and at the peak of its most recent broad movement.

The price used for analysis was $92.71.

Premium: $4.09 Expire OTM  
CRM-iron fly Strike Odds Delta
Long 101.00 91.9% 9
Break-even 97.09 ~76.5% ~25
Short 93.00 51.5% 51
Short 93.00 48.6% 49
Break-even 89.09 ~72.8% ~25
Long 85.00 86.6% 12

The premium is 51.1% of the width of the position’s wings.

The risk/reward ratio is 1:1.

The expected move is $3.76, within the $4.00 break-even width.

Decision for My Account

I have entered an order on CRM as described above. The stock at the time of entry was priced at $92.84.

By Tim Bovee, Portland, Oregon, Aug. 22, 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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