XBI Analysis

SPDR S&P Biotech exchange traded fund (XBI)

Update 7/22/2019: My short iron condor position on XBI came close to half of its maximum potential profit and I exited for a profit. The cost of the exit was a $0.35 debit, producing a $0.31 profit, with shares trading at $85.51, down $1.82 from the entry price. The position earned 47.0% of maximum potential profit. The implied volatility rank was 17.2%, up 0.3 more than its entry level.

XBI traced a sideways movement throughout all but two sessions of its holding period, running in the $85 to $87 range. The first two sessions saw a rise to the $89 level and a decline thereafter.

Shares declined by 2.1% over 20 days, or a -38% annual rate. The options position produced an 88.6% return for a +1,616.43 annual rate.

I have entered a short iron condor spread on XBI, using options that trade for the last time 45 days hence, on August 16. The premium is a $0.66 credit and the stock at the time of entry was priced at $87.33.

The profit zone for this position is between $95.66 on the upside and $76.66 on the downside.

The implied volatility rank (IVR) stands at 16.9.

Premium: $0.66 Expire OTM
XBI-iron condor Strike Odds Delta
Long 98.00 94.0% 7
Break-even 95.66 90.0% 11.5
Short 95.00 86.0% 16
Short 79.00 84.0% 15
Break-even 76.66 87.0% 12
Long 76.00 90.0% 9

The premium is 22% of the width of the position’s wings.

The risk/reward ratio is 3.5:1.

By Tim Bovee, Portland, Oregon, July 2, 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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