Live: Thursday, May 23, 2019

3:35 p.m. New York time

XOP has moved below the profit zone, signaling that under my rules, I might take the loss. A tentative addition to my trading rules, as modified, says:

If more than half of the 1SD range is beyond the profit zone in the tested direction, then exit the position. If the price moves below the profit range and the number of days required for the price to return to the profit zone, as measured by the 14-day Rate of Change, is greater than two days, then exit the position.”

At present, XOP’s one standard deviation mark is 7.1% below the profit range, and the time taken to return is 0.65 days, or about two-thirds of a trading session. So, as to an exit, not today. But XOP will need close watching. The current price of XOP shares is around $27.08, and the lower boundary of the profit zone is at $27.47.

10:10 a.m. New York time

As I did the first three days of the week, today I have once again entered an exit order for my short iron condor IYR, for $0.19, with the bid/ask midpoint at $0.18. I shall keep doing that as long as the midpoint is at 40% of maximum potential profit or higher.

My positions are due for an exit or management eight days from now, which will be 21 days before expiration on June 21.

By Tim Bovee, Portland, Oregon, May 23, 2019

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AAPL Analysis

Apple Inc. (AAPL)

I have entered a short iron condor spread on AAPL, using options that trade for the last time 35 days hence, on June 21. The premium is a $1.19 credit and the stock at the time of entry was priced at $189.98.

The profit zone for this position is between $206.18 on the upside and $171.18 on the downside.

The implied volatility rank (IVR) stands at 39.

Premium: $1.18 Expire OTM
AAPL-iron condor Strike Odds Delta
Long 210.00 75.5% 27
Break-even 206.18 80.1% 22
Short 205.00 84.7% 17
Short 175.00 80.1% 17
Break-even 171.18 83.2% 14.5
Long 170.00 86.3% 12

The premium is 23.6% of the width of the position’s wings.

The risk/reward ratio is 3.2:1.

By Tim Bovee, Portland, Oregon, May 17, 2019

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Live: Friday, May 17, 2019

4:25 p.m. New York time

And the day ends without a fill on my exit order on the IYR iron condor. The closing bid/ask midpoint was $0.18.

1:20 p.m. New York time

I’ve entered a short iron condor position on AAPL.

10:15 a.m. New York time

I’ve re-established my exit order on IYR for a debit of $0.19. The bid/ask midpoint is now running at $0.14. My remaining positions —  UNHXBIXLB and XOP — remain within the call and put short strikes. All five positions are short iron condors with very wide short strikes. In building them I aimed at delta 20 or smaller for each short leg, which produces a profit zone covering around a one standard deviation or more.

By Tim Bovee, Portland, Oregon, May 17, 2019

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Live: Thursday, May 16, 2019

1:40 p.m. New York time

I’ve updated my CGC entry analysis with results.

1 p.m. New York time

My exit order on CGC has been filled for a $0.49 debit, with shares trading at 45.29. Full results to follow.

9:50 a.m. New York time

I’ve re-entered exit orders on my short iron condors on CGC and IYR, both of which are approaching 50% of maximum potential profit, which is a signal to exit the positions under my rules.

CGC is trading at $0.51, and my ask price is $0.49. IYR is trading at $0.20 and my exit price is $0.19.

My other positions, also short iron condors, remain in the profit zone but have yet to approach the 50% of max mark. They are UNHXBIXLB and XOP.

By Tim Bovee, Portland, Oregon, May 16, 2019

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Live: Wednesday, May 15, 2019

3:25 p.m. New York time

I have two exit orders today for short iron condor positions nearing 50% of maximum potential profit, the exit point under my trading rules.

I’m asking $0.49 for the CGC options position, which is now trading at $0.52, and $0.19 for IYR, which is trading $0.22.

I’ll post an update if either order is filled; otherwise, I shall let them quietly expire.

By Tim Bovee, Portland, Oregon, May 15, 2019

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Live: Tuesday, May 14, 2019

3:20 p.m. New York time

IYR retreated from its low point without my order being filled. The position is now trading at a $0.26 debit. I’ll keep the order alive until the close and update this post in the unlikely event that it’s filled.

10 a.m. New York time

My short iron condor position on IYR  has moved near the management point, which under my trading rules is 50% of maximum potential profit. I’ve put in an exit order for a $0.19 debit, with the bid/ask midpoint running at $0.21.

My other holdings, also short iron condors, remain within their profit zones. The are  CGCUNHXBIXLB and XOP. All of my positions are scheduled for exits by May 31.

By Tim Bovee, Portland, Oregon, May 14, 2019

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Live: Monday, May 13, 2019

3:20 p.m. New York time

Despite the Sturm und Drang of the markets as the U.S.-China tariff war heats up, my six positions remain within their profit ranges. The options positions are all short iron condors with the short calls and puts set as close to a 20 delta at entry as the grid would allow. The stock symbols corresponding to my options positions, with links to the analyses, are  CGCIYRUNHXBIXLB and XOP.

Note the weekend post on the Implied Volatility Rank metric.

By Tim Bovee, Portland, Oregon, May 13, 2019

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Implied Volatility Rank (IVR)

One of my trading rules relies on Implied Volatility Rank, or IV Rank, as a metric used in choosing trades.

The rule says that when I choose a position, it must have an IVR of 25% or greater. This ensure that I’ll be entering higher-volatility trades, upon which my short iron condor trades rely in part.

The IV Rank is a metric developed by the team at TastyTrade, the education platform created by Tom Sosnoff, on whom I’ve relied greatly in drafting my own rules in their iterations over the years. What I most useful about his approach is that he backtests his assertions and makes the results of his testing public. He runs an open system, and I like that!

The TastyTrade blog today posted an explainer of IV Rank that I recommend to all who may be unfamiliar with the metric.

By Tim Bovee, Portland, Oregon, May 12, 2019

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