GDX Analysis

VanEck Vectors Gold Miners ETF  (GDX)

Update 8/26/2019I’ve exited my short iron condor on GDX at 51.1% of maximum potential profit, slightly above my normal management point. The exit cost was a $0.22 debit, giving a $0.23 profit, with shares trading at $29.95, or $0.28 above the level at entry.

GDX traced a sideways path during the entirety of my holding period. Implied volatility fell by 15.1 points, to 84.7%, from its entry level.

Shares rose by 0.9% over 17 days, or a +20% annual rate. The options position produced a 104.6% return for a +2,245% annual rate.

I have entered a short iron condor spread on GDX, using options that trade for the last time 42 days hence, on September 20. The premium is a $0.45 credit and the stock at the time of entry was priced at $29.63

The profit zone for this position is between $34.45 on the upside and $25.45 on the downside.

The implied volatility rank (IVR) stands at 99.8%.

Premium: $0.45 Expire OTM
GDX-iron condor Strike Odds Delta
Long 36.00 93.2% 9
Break-even 34.45 89.9% 12.5
Short 34.00 86.6% 16
Short 27.00 77.2% 19
Break-even 25.45 84.5% 13
Long 25.00 91.8% 7

The premium is 22.5% of the width of the position’s wings.

The profit zone covers a 16.3% move to the upside and a 16.4% move to the downside of the entry price, for total coverage of 32.7%

The risk/reward ratio is 3.4:1, with maximum risk of $155 and maximum reward of $45 per contract.

By Tim Bovee, Portland, Oregon, August 9, 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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