ORCL Analysis

Oracle Corp. (ORCL)

Update 9/18/2018: ORCL dropped sharply after earnings were published and then quickly recovered most of the temporary loss. I exited at 36.5% of maximum potential profit. Shares were at $48.65, and the debit on my options was $1.90, producing a profit of $109 per contract.

Shares declined by 1.3% over my one-day holding period, or a -489% annual rate. The options position produced a +57.4% return for a +20,939% annual rate.

I have entered a short iron fly spread on ORCL, using options that trade for the last time 32 days hence, on Oct. 19. The premium is a $2.99 credit and the stock at the time of entry was priced at $49.31.

I made the decision to enter the trade in my account based on an earnings announcement.

The profit zone for this position is between $51.99 on the upside and $45.99 on the downside.

ORCL publishes earnings on Sept. 19 after the opening bell.

Implied volatility stands at 30%, which is 2.4 times the VIX, a measure of the volatility of the S&P 500 index.

ORCL’s IV stands in the 70th percentile of its most recent broad movement..

The price used for analysis was $49.72.

Premium: $2.99 Expire OTM
ORCL-iron fly Strike Odds Delta
Long 55.00 8.0% 9
Break-even 51.99 74.7% 24
Short 49.00 53.0% 56
Short 49.00 47.0% 44
Break-even 45.99 74.0% 23
Long 43.00 10.0% 9

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

The risk/reward ratio is 1:1.

The bid/ask spread was 3.2%.

By Tim Bovee, Portland, Oregon, Sept. 17, 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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