JBL Analysis

Jabil Inc. (JBL)

JBL publishes earnings on Wednesday after the closing bell.

I shall use options that trade for the last time nine days hence, on Oct. 6.

Implied volatility stands at 36%, which is 3.7 times the VIX, a measure of the volatility of the S&P 500 index.

JBL’s IV stands in the 79th percentile of its annual range and the 88th percentile of its most recent broad movement.

The price used for analysis was $28.53.

Premium: $1.50 Expire OTM
JBL-iron fly Strike Odds Delta
Long 31.50 83.3% 13
Break-even 30.00
Short 28.50 49.1% 54
Short 28.50 51.3% 46
Break-even 27.00
Long 25.50 88.8% 9

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

The risk/reward ratio is 1:1.

The zone of profit in the proposed trade covers a $1.50 move either way. The biggest immediate move after each of the past four earnings announcements was $2.58, and the average was $1.60 After eliminating the maximum and minimum post-earnings movements, the central tendency is $1.31.

The expected move covering 85% of occurrences is $1.57, which is wider than/the profit zone.

The bid/ask spread is 20.4%.

Decision for My Account

JBL comes up short in meeting my preferences. Look first at the bid/ask spread, slightly north of 20%. A spread that wide makes it very difficult to get out of a position if things go the wrong way.

And the numbers suggest that it may well go the wrong way. The expected move with 85% confidence is 7 cents wider than the profit zone, and of the immediate post-earnings price movements over the past year, the maximum and the average are wider than the profit zone; only by tossing out the highest and the lowest movement of the four announcements does the stock come in with an expected move narrower than the profit zone.

That’s thin reed for floating my boat, and so I am passing on JBL. No trade.

By Tim Bovee, Portland, Oregon, Sept. 27, 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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