Update 5/31/2019: I exited UNH 21 days prior to expiration, for a $1.64 debit, producing a $0.64 profit per share, with stock shares trading at $240.23, or $6.53 above the entry point. The exit came at 28% of maximum potential profit, below my 50% target. The implied volatility rank at exit was 37%.
Shares rose in two steps to a peak of $251.18 during my holding period, and then dropped off for a week as exit approached.
Shares rose by 2.8% over 30 days, or a 34% annualized rate. The options position produced a 39.0% return for a 475% annualized rate.
I have entered a short iron condor spread on UNH, using options that trade for the last time 51 days hence, on June 21. The premium is a $2.28 credit and the stock at the time of entry was priced at $233.70.
The profit zone for this position is between $260 on the upside and $210 on the downside.
The implied volatility rank (IVR) stands at 46.
The premium is 22.89% of the width of the position’s wings.
The risk/reward ratio is 3.4:1.
By Tim Bovee, Portland, Oregon, May 1, 2019
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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