SPRRA S&P Oil & Gas Exploration and Production ETF (XOP)
Update 5/22/2017: XOP declinedafter entry for four days as then rose for three, ending close to where it began. I exited as earnings approached at 4.8% of maximum potential profit.
Shares showed a net rise of 0.7% over seven days, or a +35% annual rate. The options position produced a 5.0% yield on debit for a +261% annual rate.
XOP meets my implied volatility criteria for further consideration as a trade.
I shall use the series of monthly options that trade for the last time 11 days hence, on May 26.
Implied volatility stands at 32%, which is 3.1 times the VIX, a measure of the volatility of the S&P 500 index.
XOP’s IV stands in the 36th percentile of its annual range and the 78th percentile of its most recent broad movement.
The price used for analysis was $35.47
The premium is 49% 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 XOP as described above. The stock at the time of entry was priced at $1.47.
By Tim Bovee, Portland, Oregon, May 15, 2017