XLB Analysis

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.

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Based on a work at www.timbovee.com.

5 thoughts on “XLB Analysis

  1. […] 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  CGC, IYR, UNH, XBI, XLB and XOP. […]

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