SPDR S&P Regional Banking ETF (KRE)
Update 5/10/2017: KRE swung in the zig-zag pattern characteristic of a sideways correction, with time decay eventually bringing it to profitability I exited at 25% of maximum potential profit.
Shares produced a net rise of 3.0% over 44 days, or a 25% annual rate. The options position produced a 33.3% yield on debit for a 277% annual rate.
KRE’s implied volatility stands sufficiently high for me to meet my standards for trading.
I shall use the MAY series of options, which trades for the last time 53 days hence, on May 19.
Implied volatility stands at 26%, which is double the VIX, a measure of the volatility of the S&P 500 index.
KRE’s IV stands in the 43rd percentile of its annual range and the 52nd percentile of its most recent broad movement.
The price used for analysis was $52.54.
|KRE – iron fly||Strike||Odds||Delta|
The premium is 54% of the width of the position’s wings.
The risk/reward ratio is 1:1.
Decision for My Account
I have entered a position on KRE as described above. The stock at the time of entry was priced at $52.68.
By Tim Bovee, Portland, Oregon, March 27, 2017