HAL Trade

Halliburton Co. (HAL)

I have entered a short iron condor spread on HAL, using options that trade for the last time 56 days hence, on March 18. The premium is a $1.75 credit per contract share and the stock at the time of entry was priced at $27.44.

The Implied Volatility Ratio stands at 32.7%

Premium:$1.75Expire OTM
HAL-iron condorStrikeOddsDelta
Calls
Long34.0091.0%14
Break-even30.7578.5%28
Short29.0066.0%42
Puts
Short25.0066.0%27
Break-even21.7578.5%16.5
Long20.0091.0%6

The premium is 35% of the width of the position’s short and long spreads. The profit zone covers a 12.1% move to the upside and a 26.2 move to the downside.

The risk/reward ratio is 1.9:1, with maximum risk of $325 and maximum reward of $175 per contract.

How I chose the trade. The trade was placed to coincide with HAL’s earnings announcement, before the opening bell on January 24, after the weekend. The expected move was exceptionally narrow, at $0.36 either way, based on options pricing. So I went wider than the implied price range, $27.12 to $27.84.

By Tim Bovee, Portland, Oregon, January 21, 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.

Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 continued to fall during the day, with the futures reaching the 4380s and the index, the 4390s. Downtrending wave 1{-9} continues. No change to the analysis. I’ve updated both charts.

What comes next? Wave 1{-9} is late in the 3rd or possibly 5th wave internally, meaning that the end is in site. When 1{-9} is complete, it will be followed by a 2nd wave correction that typically will retrace much of the prior 1st wave, perhaps reaching back into the 4700s. That upward correction will be followed by a powerful downtrending wave 3{-9}, which will be a strong signal to traders that the bull years may have come to an end. The ensuing wave 4{-9} will typically be a largely sideways correction, and then wave 5{-9} will decline still further, completing the parent wave 1{-8}. After that, wave 2{-9} again carries the prices upward, most likely higher than they are now, before an even more power wave 3{-8} brings things crashing down.

11:15 a.m. New York time

HAL earnings play entry. I’ve opened a short iron condor options position on HAL in anticipation of its earnings announcement on Monday before the opening bell. I’ve posted an analysis of the trade.

10:55 a.m. New York time

MU earnings play exit. I exited a short iron condor options position on MU that I entered last December in two parts. The first came near the end of December, to avoid assignment of the in-the-money calls when the stock went ex-dividend. I held on to the puts, in the form of a bull put spread, until the last trading day. The put options at the last moment gained some value, raising the certain prospect of assignment, and I exited. I’ve updated the analysis with results for the remaining bull put spread and for the iron condor as a whole.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures fell to 4429.50 in overnight trading, reaching below the December 3 low of 4492.

What does it mean? The January 4 peak at 4808.25 ended an uptrend that began on September 30 from 4293.75 and a new downtrend has begun that will eventually reach 2000 and below.

What’s the alternative? The correction that began from the January 4 peak is still underway and will be followed by a rise to new heights, above 4808.25.

Charts. The upper chart is a near-term view of the S&P 500 futures, going back to mid-November 2021. The lower chart is a long-term view of the S&P 500 index, going back to mid-July 2019, showing the February 2020 crash early in the pandemic.

[S&P 500 E-mini futures at 3:30 p.m., 135-minute bars, with volume]
[S&P 500 index at 3:27 p.m., hourly bars]

What does Elliott wave theory say? I’ve said written on several occasions that if the price moved below 4492, the start of wave 5{-8}, then I would take that as a strong signal that a new downtrend had begun. The move below 4492 in overnight trading demanded a new downtrend the principal analysis.

The secondary analysis is where we’ve been since January 4 — a 4th wave downward correction of the {-9} degree that was in its C wave and nearing its end. This still remains as a viable options because there’s no rule in Elliott that says that a 4th wave can’t move below the beginning of the preceding 1st wave. It seems inelegant, but there you go. Sometimes the markets present an odd aesthetic.

Under my principal analysis, the January 4 peak completed 5th wave cascading up from wave 5{-8}, which began on August 19, 2021, all the way to wave 5{-2}, which began October 4, 2021. The end of wave 5{-2} in turn marks the end of its parent, wave 3{-1}, which began on February 23, 2020 at the end of the early pandemic crash.

The red lines on the long-term chart mark the boundaries of an expanding Diagonal Triangle that began in December 2018. Wave 4{-1} will eventually reach the lower boundary of the triangle, which is presently in the 1960s. Since the triangle is expanding, the lower boundary will decline further each day and so will be noticeably lower by the time the market arrives at that boundary.

It will be an epic decline, and then it will reverse in Wave 5{-1}, which will carry the price back to the every rising upper boundary. At that point, the triangle will be complete, cascading up the fractal wave structure to wave 3{+4}, which began in the late 17th century, according to Robert Prechter‘s analysis. The ensuing wave 4{+4} decline will be of a magnitude no person alive today has ever seen.

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it this way in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, in the ever-changing markets, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, January 21, 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.

NFLX Trade

Netflix Inc. (NFLX)

I have entered a short iron condor spread on NFLX, using options that trade for the last time 57 days hence, on March 18. The premium is a $4.05 credit per contract share and the stock at the time of entry was priced at $517.50.

The Implied Volatility Ratio stands at 86.5%

Premium:$4.05Expire OTM
NFLX-iron condorStrikeOddsDelta
Calls
Long575.0078.0%27
Break-even569.0576.0%29
Short565.0074.0%31
Puts
Short450.0078.0%18
Break-even444.0579.5%16.5
Long440.0081.0%15

The premium is 40.5% of the width of the positions short/long spreads. The profit zone covers a 10% move to the upside and a 16.5% move to downside. I skewed the position in order to give greater protection to a downside move.

The risk/reward ratio is 1.5:1, with maximum risk of $595 and maximum reward of $405 per contract.

How I chose the trade. The trade was placed to coincide with NFLX’s earnings announcement, after the closing bell on the day of entry. The short strikes were set beyond the expected move of $34.36 either way, based on options pricing, which would give a price range of $483.14 to $561.86. NFLX has a history of breaking beyond expectations, and I’ve been burnt before by that tendency. So the position, as designed, is profitable between $450 and $565, providing more cushion for an overly large post-announcement move. And as a I said above, it’s skewed to the downside.

By Tim Bovee, Portland, Oregon, January 20, 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.

Trader’s Notebook

4:15 p.m. New York time

Earnings play exit. During the session I exited my short iron condor position on DAL, for a 24% return over eight days. I’ve updated the trade analysis with details of the exit.

3:50 p.m. New York time

Earnings play exit. I’ve exited my short iron condor position on WFC after seven days, for a 17.4% return. I’ve updated the trade analysis with full details.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures reversed and moved a few points below the overnight now, to 4510.25 so far. This morning’s first alternative analysis is correct. Wave C{-10} within wave 4{-9} is still underway. I’ve updated the chart.

10:35 a.m. New York time

Earnings play entry. I’ve entered a short iron condor options position on NFLX, timed to coincide with the company’s earnings announcement after the closing bell. I’ve posted an analysis of the trade.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures declined overnight to 4514.50, below the December 20 low of 4520.25 and then rose by 50 points before the opening bell.

What does it mean? The last leg of the downward correction that began on January 4 from 4808.25 has met all requirements for completion. The overnight low could be the end of the correction …

What’s the alternative? … or, as the first alternative, the price could reverse and it could decline further. As I did yesterday, I’ve marked the chart to comply with the principal analysis. But I think this first alternative is equally likely.

As a second alternative, the pattern of the decline from the high of January 4 is also consistent with the beginning of a new downtrend. This would require adjusting the wave number for January 4. The ambiguities in the lead-up to that high make it possible this alternative will play out.

A decline below 4492 — the low of December 3 — would confirm this second alternative. A rise above 4808.25 — the high of January 4 — would confirm the principal analysis.

[S&P 500 E-mini futures at 3:30 p.m., 135-minute bars, with volume]

What does Elliott wave theory say? Under the principal analysis, wave C{-10} within wave 4{-9} ended overnight, and wave 5{-9} began its ascent to new highs.

Under the first alternative, wave C{-10} has a few more very low level internal waves to complete before it is done. I count the final downward movement that ended last night as wave 5{-12} within wave 5{-11} within wave C{-10}.

Both the principal analysis and the first alternative are taking place within wave 5{-8}, which began on December 3 from 4492, and the January 4 peak was the end of wave 3{-9} within wave 3{-8}.

Under the second alternative, the January 4 peak marked the end of wave 5{-8}, and the decline since then, internally movements of 5, 3 and 5 waves, marks waves 1, 2 and 3 — all of the {-10} degree — within downtrending wave 1{-9}.

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it this way in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, in the ever-changing markets, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, January 20, 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.

UNP Trade

Union Pacific Corp. (UNP)

I have entered a short iron condor spread on UNP, using options that trade for the last time #30 days hence, on February 18. The premium is a $1.85 credit per contract share and the stock at the time of entry was priced at $239.58.

The Implied Volatility Ratio stands at 56.6%

Premium:$1.85Expire OTM
UNP-iron condorStrikeOddsDelta
Calls
Long255.0090.0%13
Break-even251.8584.5%18.5
Short250.0079.0%24
Puts
Short225.0073.0%25
Break-even221.8576.0%21.5
Long220.0079.0%18

The premium is 37% of the width of the positions short/long spreads. The profit zone covers a 5.1% move to the upside and an 8.0% move to the downside.

The risk/reward ratio is 1.7:1, with maximum risk of $315 and maximum reward of $185 per contract.

How I chose the trade. The trade was placed to coincide with UNP’s earnings announcement, before the opening bell on the day after entry. The short strikes were set to coincide with the expected move of $11.73 either way, based on options pricing, which gives a price range of $227.30 to $250.76.

By Tim Bovee, Portland, Oregon, January 19, 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.

Trader’s Notebook

4:15 p.m. New York time

At the close. The S&P 500 futures declined further in the final minutes of the trading session, reaching a low of 4521.25 as the closing bell sounded. The price moved lower that yesterday’s reversal point, 4535.50, refuting my principal analysis and validating the first alternative: The overnight rise is a low-level rise within the larger, ongoing downward correction. The present decline is the 5th wave within wave C{-10} within the wave 4{-9} downward correction. I’ve updated the chart.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures peaked, at 4603, nine minutes after the opening bell, and then declined, remaining above yesterday’s 4535.50 reversal point. The pattern is consistent with a 2nd wave downward correction within uptrending wave 5{-9}, which began at yesterday’s low. No change in the analysis. I’ve updated the chart below.

12:55 p.m. New York time

Earnings play entry. I’ve entered a short iron condor earnings play on UNP and have posted an analysis of the options trade.

12:30 p.m. New York time

Earnings play exit. I’ve exited my short iron condor earnings play on TFC for a 34.3% profit in five days (including a weekend) and have updated the trade analysis with full results.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures fell further in overnight trading, to a low of 4535.50, and then reversed to the upside.

What does it mean? The low marks the completion of the downward correction that began on January 4 from 4808.25, and the beginning of an uptrend that will carry price above that level to new highs.

What are the alternative? Alternative #1: The overnight rise is a low-level rise within the larger, ongoing downward correction. Alternative #2: The decline from January 4 was the first leg of a new downtrend that eventually will carry the price back toward 4000 and perhaps still lower.

[S&P 500 E-mini futures at 4:15 p.m., 135-minute bars, with volume]

What does Elliott wave theory say? Under my principal analysis, wave 4{-9} ended last night at 4535.50, and the subsequent rise is wave 1{-10} within wave 5{-9}, which will move beyond 4808.25, the January 4 high that ended wave 3{-9}, and perhaps significantly beyond it, since there are no limits to how far 5th waves can travel. This scenario brings higher prices quite soon and is at odds with the conventional wisdom in the financial media, which is anything but bullish.

The first alternative analysis sees the overnight rise as a subwave of an ongoing wave 5{-11} within wave C{-10} within wave 4{-9}. Wave C will end when the 5th subwave is complete, but not yet. This scenario brings higher prices, but not quite as quickly as is the case with the principal analysis.

The second alternative analysis, which I’ve had on the alternatives list for awhile, sees the January 4 high as the end of wave 5{-9} and the beginning of a downtrend that will carry the price to the low 4000s and perhaps still lower. This scenario would feel something like a mini-crash and is most in line with what I’m reading these days in the financial media, which is quite bearish.

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it this way in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, in the ever-changing markets, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, January 19, 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.

MS Trade

Morgan Stanley (MS)

I have entered a short iron condor spread on MS, using options that trade for the last time 31 days hence, on February 18. The premium is a $1.88 credit per contract share and the stock at the time of entry was priced at $94.76.

The Implied Volatility Ratio stands at 52.9%

Premium:$1.88Expire OTM
MS-iron condorStrikeOddsDelta
Calls
Long105.0089.0%14
Break-even101.8882.0%21
Short100.0075.0%28
Puts
Short90.0068.0%30
Break-even86.8875.1%23
Long85.0082.2%16

The premium is 37.6% of the width of the position’s short/long spreads. The profit zone covers a 7.5% move to the upside and a 9.1% move to the downside.

The risk/reward ratio is 1.7:1, with maximum risk of $312 and maximum reward of $188 per contract.

How I chose the trade. The trade was placed to coincide with MS’s earnings announcement, before the opening bell on the day after entry. The short strikes were set to coincided with an expected move of $2.96 either way, based on options pricing, which gives a price range of $91.80 to $97.72.

By Tim Bovee, Portland, Oregon, January 18, 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.

Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures continued to decline throughout the day, as wave C{-10} within wave 4{-9} fell below the end point of the previous wave A{-10}. No change in the analysis. I’ve updated the chart.

10:45 a.m. New York time

Another trade. I’ve entered a short iron condor earnings play on MS and have posted an analysis of the trade.

My trade. I’ve exited my short iron condor earnings play on LW for a 35.2% profit and have updated the analysis with full results.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures fell in overnight trading, reaching 4590.25 so far.

What does it mean? The decline is the final leg of a downward correction that began on January 4 from 4808.25. It will be followed by a rise above that level to new heights.

What are the alternatives? There are two, the same as those outlined in detail in yesterday’s post. A third, that the low, 4606, attained on January 14 ended the downward correction (Alternative #2 in yesterday’s post), is no longer a valid alternative, since the price has dropped below that level.

The alternatives:

  1. A resumption of the downtrend that began on January 14, carrying the price below the December 20 low of 4520.25.
  2. A compound correction. The rise from January 10 to January 12 connects two corrective patterns. The first was the decline from January 4 to January 10, and the second began on January 12.
[S&P 500 E-mini futures at 3:30 p.m., 2-hour bars, with volume]

What does Elliott wave theory say? Under the principal analysis, within wave 4{-9}, wave C{-10}, which began on January 12, is still underway and is in its 5th wave internally.

Under the first alternative, within wave 1{-9}, wave 3{-10} began on January 12 following an upward correction, the first steps of a larger decline.

Under the second alternative, within wave 4{-9}, one downward corrective pattern ended on January 10, the connecting wave X{-10} ended on January 12, and the first wave of a second corrective pattern within wave 4{-9} is now underway.

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it this way in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, in the ever-changing markets, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, January 18, 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.

Trader’s Notebook

10:45 a.m. New York time

What’s happening now? The S&P 500 E-mini futures traded sideways in overnight trading, remaining within a range of less than 35 points. The U.S. stock and options markets will be closed today for a day honoring the civil rights activist Martin Luther King. The futures and bond markets will hold shortened sessions.

What does it mean? The last leg of the correction is itself on its last leg, needing only one more decline to be complete.

What are the alternative? Alternative #1: The upward move from January 10 was a correction within a new downtrend that began on January 14. The subsequent decline is a movement in the direction of the downtrend that will carry the price below the December 20 low of 4520.25

Alternative #2: The downward correction ended on January 14, and the subsequent rise is the first tentative step of a resumption of the uptrend.

Alternative #3: The correction that began on January 14 has completed one corrective pattern, and after a connecting rise, will add a second corrective pattern in a compound structure.

[S&P 500 E-mini futures at 10:45 a.m., 2-hour bars, with volume]

What does Elliott wave theory say? There is a stark contrast between my principal scenario and the first alternative. The one sees the beginning of an uptrend that will carry the price a considerable distance higher. The other sees the beginning of a major downtrend that over time will carry the price down to levels not seen since 2016.

Under the principal scenario, the decline from January 12 is wave C{-10} within wave 4{-9}. The C wave has three waves, and whether the decline is a Flat or a Zigzag, the C wave will have five waves internally. Arguably, four waves are complete; one more to go. The end of wave C will also be the end of wave 4{-9}, and the subsequent wave 5{-9} will carry the price to new heights, beyond the January 4 end of wave 3{-9}, leading to a series of ever-larger corrections and rises still higher.

The first alternative is the polar opposite. The January 4 peak ended wave 5{-9} and its parent, wave 5{-8}, and the subsequent decline is wave 1{-9} within wave 1{-8}, the first stage of a new downtrend that will reach below 2000.

The third alternate is less grandiose, focusing on the on the meaning of the decline since January 12. The principal analysis sees it as three waves within wave C, with a 4th wave now underway. The alternative sees the low of January 14 as being the end of wave C, and the subsequent rise as an X wave connecting two corrective patterns within a compound structure. As noted above, wave C must have five waves internally. And If I squint real hard, I can see a tiny 4th wave before the final fall to the January 14 low. Honestly, it seems too small for a 4th wave of degree {-11}, but it’s not impossible.

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it this way in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, in the ever-changing markets, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

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

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.

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