TFC Trade

Truist Financial Corp. (TFC)

Update 1/19/2022: I exited my short iron condor position on TFC 30 days before expiration, for a $1.75 debit per contract/share, a profit before fees of $60 per contract. Shares were trading at $65.11, down $1.98 from the entry level.

The Implied Volatility Rank at exit was 32.7%, down 5.0 points from the entry level.

I exited because the position reached 25% of maximum potential profit, my normal exit point for earnings plays.

Shares declined by 3.0% over five days for a 215% annual rate. The options position produced a 34.3% return for a 2,503% annual rate.


I have entered a short iron condor spread on TFC, using options that trade for the last time 35 days hence, on February 18. The premium is a $2.35 credit per contract share and the stock at the time of entry was priced at $67.09

The Implied Volatility Ratio stands at 37.7%

Premium:$2.35Expire OTM
TFC-iron condorStrikeOddsDelta
Calls
Long75.0095.0%7
Break-even69.8576.0%27
Short67.5057.0%47
Puts
Short62.5073.0%23
Break-even59.8581.5%15.5
Long57.5090.0%8

The premium is 37.6% of the width of the positions short/long spreads. The profit zone covers a 4.1% move to the upside and a 12.1% move to the downside. I skewed in favor of the downside because of analyst expectations of a negative earnings surprise.

The risk/reward ratio is 1.7:1, with maximum risk of $390 and maximum reward of $235 per contract.

How I chose the trade. The trade was placed to coincide with TFC’s earnings announcement, before the opening bell the day after the weekend. The short strikes were set to coincide with the expected move of $1.21 either way, based on options pricing, which gives a price range of $65.71 to $68.13. Zacks Earnings Surprise Predictor for TFC has a -1.30% score, based on switches in analysts ratings, indicating a higher likelihood of a negative earnings surprise. Overall, TFC has a Zacks rank of Hold.

By Tim Bovee, Portland, Oregon, January 14, 2022

Disclaimer

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.

License
Creative Commons License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

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