KRE Analysis

SPDR S&P Regional Banking ETF (KRE)

Update 6/26/2019: KRE reached 50% of maximum potential profit, and I exited my short iron condor options position for a $0.30 debit, which gave the position a $0.30 profit, with shares trading for $51.94, down $0.29 from their price at entry.

KRE traded in a narrow range of a bit more $1 during my holding period. The implied volatility rank at exit was 37.9%, up 3.7 points from the entry level. The hope in trading short iron condors is that volatility will decline, but such was not the case with this trade. The financial sector was impacted by speculations that the Federal Open Market Committee would cut the federal funds rate.

Shares declined by 0.6% over 20 days, or a -10% annual rate. The options position produced a 100.0% return for a +1,825% annual rate.

I have entered a short iron condor spread on KRE, using options that trade for the last time 43 days hence, on July 19. The premium is a $0.60 credit and the stock at the time of entry was priced at $52.23.

The profit zone for this position is between $56.60 on the upside and $44.60 on the downside.

The implied volatility rank (IVR) stands at 34.2%.

Premium: $0.60 Expire OTM
KRE-iron condor Strike Odds Delta
Long 59.00 95.0% 6
Break-even 56.60 88.5% 12.5
Short 56.00 82.0% 19
Short 48.00 81.0% 17
Break-even 44.60 86.5% 12
Long 44.00 92.0% 7

The premium is 17.1% of the width of the position’s wings.

The risk/reward ratio is 4.8:1.

By Tim Bovee, Portland, Oregon, June 6, 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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