ATVI Analysis

Activision Blizzard Inc. (ATVI)

I have entered a short iron fly spread on ATVI, using options that trade for the last time 43 days hence, on Dec. 21. The premium is a $6.16 credit and the stock at the time of entry was priced at $63.01.

I entered the trade to coincide with an earnings announcement today, Nov. 8, after the closing bell.

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

Implied volatility stands at 47%, which is 2.8 times the VIX, a measure of the volatility of the S&P 500 index.

ATVI’s IV stands higher than 88% of its daily readings over the past year, the IV rank metric.

The price used for analysis was $63.-2.

Premium: $6.16 Expire OTM
ATVI-iron fly Strike Odds Delta
Long 72.50 85.0% 18
Break-even 68.66 67.5% 37
Short 62.50 50.0% 55
Short 62.50 50.0% 45
Break-even 56.16 70.0% 27
Long 50.00 90.0% 8

The premium is 54.98% of the width of the position’s wings.

The risk/reward ratio is 0.8:1, with maximum potential loss of $509 per contract and maximum potential gain of $616 per contract.

The bid/ask spread was 7%.

By Tim Bovee, Portland, Oregon, Nov. 8, 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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