IWM Analysis

iShares Russell 2000 ETF (IWM)

Update 8/20/2019My short iron condor position on IWM reached 50% of maximum potential profit, and I exited for a $0.90 debit — half the credit received at entry. Shares at exit were trading at $149.25, which is $1.12 above their level at entry.

IWM meandered in a sideways movement during the holding period, and that was reflected in the implied volatility rate, which fell by 19.8 points from the entry level to 29.0% at exit.

Shares rose by 0.8% over 14 days, or a +20% annual rate. The options position produced a 100.0% return for a +2,607% annual rate.

I have entered a short iron condor spread on IWM, using options that trade for the last time 45 days hence, on September 20. The premium is a $1.80 credit and the stock at the time of entry was priced at $148.13.

The profit zone for this position is between $156.80 on the upside and $126.80 on the downside.

The implied volatility rank (IVR) stands at 48.8.

In building the trade, I skewed it to provide a deeper profit zone to the downside.

Premium: $1.80 Expire OTM
IWM-iron condor Strike Odds Delta
Long 162.00 93.0% 7
Break-even 156.80 84.0% 16.5
Short 155.00 75.0% 26
Short 132.00 87.0% 12
Break-even 126.80 90.0% 9
Long 125.00 93.0% 6

The premium is 25.7% of the width of the position’s wings.

The risk/reward ratio is $520 to $180 per contract, or 2.9:1.

By Tim Bovee, Portland, Oregon, August 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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