X Analysis

United States Steel Corp. (X)

I have entered a short vertical spread on X, using options that trade for the last time 65 days hence, on May 18. The premium is a $0.78 credit and the stock at the time of entry was priced at $39.24.

I made the decision to enter the trade in my account based on expectations of a negative earnings surprise as reported by Zacks, a downtrend signal on the Fisher Transformer and a bearish Elliott wave analysis. My view of the markets is that they have been in a significant downtrend since the Jan. 26 peak, and so I chose to trade a symbol with bearish metrics.

X publishes earnings on April 24 after the closing bell.

Implied volatility stands at 47%, which is 2.8 times the VIX, a measure of the volatility of the S&P 500 index.

X’s IV stands higher than 31% of its daily readings over the past year and stands in the 62nd percentile of its most recent broad movement.

The price used for analysis was $39.43.

Premium: $0.78 Expire OTM  
X-bear call spread Strike Odds Delta
Long 42.00 66.5% 41
Break-even 39.22 62.0% 46
Short 40.00 57.5% 51

The premium is 78% of the width of the position’s wings.

The risk/reward ratio is 1.6:1.

The bid/ask spread was 10.3%.

By Tim Bovee, Portland, Oregon, March 14, 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.

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.

2 thoughts on “X Analysis

  1. Tim, a short 50 delta, long 40 delta call spread with 65 days-to-expiry has won 2 times and lost 5 times over the past year. The overall loss for the trades is about 47%. Regards, Karl


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