XLF Analysis

I entered this position XLF while Private Trader was hosted on Blogger and experiencing huge platform problems. As a result, I traded XLF without posting an analysis of any short.

I have since switched to WordPress as my host and exited the XLF position today.

Here’s a brief description of the trade and the results.

Financial Select Sector SPDR ETF (XLF)

Update 1/5/2017XLF moved into a series of sideways swings after I entered the position. I exited at 27% of maximum potential profit.

Shares declined by 0.1% over 29 days, or a -2% annual rate. The options position produced a 37.3% yield on debit for a +470% annual rate.

I’m looking at XLF as a potion volatility play. Implied volatility is sufficiently high to meet my guidelines for further consideration: At the 50th percentile or above of either the annual volatility range or the most recent broad swing.

The trade was based on one entered by Ryan at Dough.

I shall use the JAN options, which expire Jan. 20, 2017.

I’m structuring the trade as an iron fly.

XLF JAN
$1.03 Strike
Calls
Long 25.00
Break-even 24.03
Short 23.00
Puts
Short 23.00
Break-even 21.97
Long 21.00

The premium, $1.03, is 52% of the width of the position’s wings.

Decision for My Account

I entered a position on XLF as described above. The stock at time of entry was priced at $23.41.

By Tim Bovee, Portland, Oregon, Dec. 7, 2016

 

 

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