Update 7/21/2022: I exited my short bull put vertical spread on AN, 29 days before expiration, for a $1.55 debit per contract/share, a wash before fees, meaning the exit and entry prices were the same. Shares were trading at $119.74, down $0.68 from the entry level.
The Implied Volatility Rank at exit was 29.1%, down 15.5 points from the entry level.
Although AN’s earnings beat the estimates, the price fell. I exited on the day after entry for neither a profit nor a loss. The exit point was 44.9% of maximum potential loss.
Shares fell by 0.6% over one day for a -206% annual rate. The options position produced neither a return nor a loss.
I have entered a short bull put vertical spread on AN, using options that trade for the last time 30 days hence, on August 19. The premium is a $1.55 credit per contract share and the stock at the time of entry was priced at $120.42.
The Implied Volatility Ratio stood at 44.6%.
|AN-bull put spread||Strike||Odds||Delta|
The premium is 62% of the width of the position’s short/long spread. The profit zone covers a 3.2% move to the downside and an unlimited move to the upside.
The risk/reward ratio is 2.2:1, with maximum risk of $345 and maximum reward of $155 per contract.
How I chose the trade. The trade was placed to coincide with AN’s earnings announcement, before the opening bell on the day after entry. The short strikes were set to coincide with the expected move of $10.97 either way, based on options pricing, which gives a price range of $109.45 to $131.39.
By Tim Bovee, Portland, Oregon, July 20, 2022
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.
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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[…] bull put vertical spread on AN, using options that trade for the last time on August 19, and have posted an analysis of the […]
[…] nor a loss. That works out to 44.9% of the maximum potential loss on the position. I’ve updated the trade analysis with full […]
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