IYR Analysis

iShares U.S. Real Estate ETF (IYR)

Update 7/26/2019I exited IYR 21 days before expiration, as required by my trading rules. The cost of existing was $0.36 debit, for a $0.07 yield, or 16.3% of maximum potential profit. Shares at exit were trading for $88.41, down $1.62 from the entry level.

The stock price peaked five trading days into my holding period, and then declined for eight trading days there after, ending with a sideways trend just below the $89 level. The implied volatility rank rose by three points to 31.4%.

Shares declined by 1.8% over 23 days, or a -29% annual rate. The options positions produced a +19.4% return for a 309% annual rate.

I have entered a short iron condor spread on IYR, using options that trade for the last time 44 days hence, on August 16. The premium is a $0.43 credit and the stock at the time of entry was priced at $90.03.

The profit zone for this position is between $94.43 on the upside and $85.43 on the downside.

The implied volatility rank (IVR) stands at 28.4.

In constructing the position, I introduced a skew, increasing the profit zone on the upside and decreasing it on the downside.

Premium: $0.43 Expire OTM
IYR-iron condor Strike Odds Delta
Long 97.00 94.0% 5
Break-even 94.43 90.0% 9.5
Short 94.00 86.0% 14
Short 87.00 76.0% 24
Break-even 85.43 81.0% 19.5
Long 85.00 86.0% 15

The premium is 17.2% of the width of the position’s wings.

The risk/reward ratio is 4.8:1.

By Tim Bovee, Portland, Oregon, July 3, 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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