Materials Select Sector SPDR Fund (XLB)
Update 6/4/2019: XLB turned profitable 17 days before expiration, and I exited my short iron condor position for 22.9% of maximum potential profit. It cost me a $0.37 debit to close the position, leaving an $0.11 profit from the entry credit of $0.48.
XLB languidly fell for most of the period I held the position, and then rose sharply for two last two days. I exited with share prices trading at $54.97, down $1.50 from the entry price. The implied volatility ratio at the close was 32.5%, up 4 points from when I entered the position.
Shares declined by 2.7% over 32 days, or a -30% annual rate. The options position produced a 29.7% return for a +339% annual rate.
I have entered a short iron condor spread on XLB, using options that trade for the last time 49 days hence, on June 21. The premium is a $0.48 credit and the stock at the time of entry was priced at $56.47.
The profit zone for this position is between $59.48 on the upside and $49.48 on the downside.
The implied volatility rank (IVR) stands at 28.5.
| Premium: | $0.48 | Expire OTM | |
| XLB-iron condor | Strike | Odds | Delta |
| Long | 61.00 | 96.0% | 5 |
| Break-even | 59.48 | 89.0% | 12.5 |
| Short | 59.00 | 82.0% | 20 |
| Puts | |||
| Short | 53.00 | 80.0% | 18 |
| Break-even | 49.48 | 86.0% | 12.5 |
| Long | 49.00 | 92.0% | 7 |
The premium is 16% of the width of the position’s wings.
The risk/reward ratio is 5.3:1.
By Tim Bovee, Portland, Oregon, May 3, 2019
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
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.
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