XOP Analysis

SPDR S&P Oil and Gas Exploration and Production (ETF) (XOP)

Update 7/12/2017: XOP traced a sideways zig-zag about $2 wide since I entered, in the last. In the last few days it has toyed with my target level but never quite made it. To clear space for other trades and to remove risk, I exited at 22.2% of maximum potential profit. My target was 25%.

Shares rose by 1.3% over 15 days, or a +33% annual rate. The options position produced a +28.6% yield on debit for a +695% annual rate.


XOP has halted its decline with implied volatility still relatively high. I shall look at it as a non-directional trade on the expectation that the price will fluctuate sideways for awhile before making its next move.

I shall use options that trade for the last time 24 days hence, on July 21.

Implied volatility stands at 33%, which is 3.3 times the VIX, a measure of the volatility of the S&P 500 index.

XOP’s IV stands in the 39th  percentile of its annual range and the 75th percentile of its most recent broad movement.

The price used for analysis was $31.42.

Premium: $1.71 Expire OTM  
XOP-iron fly Strike Odds Delta
Long 35.00 86.2% 12
Break-even 33.21
Short 31.50 54.7% 49
Puts
Short 31.50 45.2% 51
Break-even 29.71
Long 28.00 93.6% 7

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 an order on XOP as described above. The stock at the time of entry was priced at $31.34.

By Tim Bovee, Portland, Oregon, June 27, 2017

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.

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