Generac Holdings Inc. (GNRC)

Update 10/1/2018:  I 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.

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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.

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