GNRC Analysis

Generac Holdings Inc. (GNRC)

Update 10/1/2018I exited my short iron  position on GNRC at 50% of maximum potential profit, my designated exit point for that strategy. I bought the options back for $0.59 debit, for a $0.62 profit. Shares stood at $57.77 when I exited.

The share price fell for much of the holding period but remained within the profitable range. Implied volatility was fairly steady, declining a little but then rrising a bit. IV stood at 31% when I exited, compared to 35% at entry.

Shares declined by 1.8% over 18 days, or a -36% annual rate. The options position produced a +105.1% return for a +2,131% annual rate.


I have entered a short iron condor spread on GNRC, using options that trade for the last time 37 days hence, on Oct. 19. The premium is a $1.21 credit and the stock at the time of entry was priced at $57.77.

I made the decision to enter the trade in my account based on high implied volatility.

The profit zone for this position is between $61.21 on the upside and $53.71 on the downside.

Implied volatility stands at 35%, which is 3.2 times the VIX, a measure of the volatility of the S&P 500 index.

GNRC’s IV stands higher than 69.8% of its daily readings over the past year.

The price used for analysis was $58.10.

Premium: $1.21 Expire OTM
GNRC-iron condor Strike Odds Delta
Long 62.50 76.3% 27
Break-even 61.21 69.9% 34
Short 60.00 63.4% 41
Puts
Short 55.00 67.7% 29
Break-even 53.71 74.1% 23
Long 52.50 80.5% 17

The premium is 48.4% of the width of the position’s wings.

The risk/reward ratio is 1.1:1.

The bid/ask spread was 34.6%.

By Tim Bovee, Portland, Oregon, Sept. 12, 2018

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.

13 thoughts on “GNRC Analysis

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s