IWM Analysis

iShares Russell 2000 ETF (IWM)

Update 4/2/2018: Big caps, small caps — whatever the size of the underlying company, shares continued the broad decline that began in late January. A Monday session added another downward dip to the charts, and I exited IWM for a $0.60 debit, or 63.2% of maximum potential profit, with shares at $148.89.

IWM’s shares declined by 2.5% over my 33-day holding period, or a -27% annual rate. The options position produced a 171.7% return for a +1,899% annual rate.

.I have entered a short vertical spread on IWM, using options that trade for the last time 51 days hence, on April 20. The premium is a $1.63 credit and the stock at the time of entry was priced at $152.65.

I made the decision to enter the trade in my account based on a Fisher Transform switch to a downtrending signal within the context of a bearish Elliott wave count.

Implied volatility stands at 20%, which is 1.1 times the VIX, a measure of the volatility of the S&P 500 index.

IWM’s IV stands higher than 44% of its daily readings over the past year and stands in the 53rd percentile of its most recent broad movement..

The price used for analysis was $152.83.

Premium: $1.63 Expire OTM  
IWM-bear call spread Strike Odds Delta
Long 158.00 78.3% 27
Break-even 152.37 67.5% 37
Short 154.00 56.7% 46

The premium is 81.5% of the width of the position’s wings.

The risk/reward ratio is 1.5:1.

The bid/ask spread was 1.2%.

By Tim Bovee, Portland, Oregon, Feb. 28, 2018


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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