Update 2/5/2018: UAA fell steadily from the time I entered a bear call options spread. I exited at 28.1% of maximum potential profit, a bit better than my goal of 25%.
Shares declined by 5.4% over my five-day holding period, or a -391% annual rate. The options position produced a 39.1% return for a +2,857% annual rate.
I have entered a bear put vertical spread on UAA, using options that trade for the last time 16 days hence, on Feb. 16. The premium is a $0.32 credit and the stock at the time of entry was priced at $14.11.
I made the decision to enter the trade in my account based on a downtrend signal from the Fisher Transformer and a very negative earnings surprise predictor of -80% from Zacks.
UAA publishes earnings on Feb. 13 before the opening bell.
Implied volatility stands at 73%, which is 5.3 times the VIX, a measure of the volatility of the S&P 500 index.
UAA’s IV stands in the 81st percentile of its annual range and the 50th percentile of its most recent broad movement.
The price used for analysis was $14.09.
|UAA-bear call spread||Strike||Odds||Delta|
The premium is 64% of the width of the position’s wings.
The risk/reward ratio is 2.1:1.
The bid/ask spread was 3.0%.
By Tim Bovee, Portland, Oregon, Jan. 13, 2018
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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