XLY Analysis

The Consumer Discretionary Select Sector SPDR Fund (XLY)

Update 8/30/2019I exited my short iron condor position on XLY for a small profit at my normal time for managing winning trades: 21 days before the options expire. The exit cost was a $0.82 debit, providing a $0.09 profit, with shares trading at $119.54, up $0.19 from the price at entry. The exit price was at 9.9% of maximum potential profit.

Three days after I entered the position the underlying share price fell sharply down to $116.49, turned unprofitable as it fluctuated around the $118 level before rising to slightly above my entry point and returning to profitability.

Shares rose by 0.2% over nine days, or a 6% annual rate. The options position produced an 11.0% return for a 445% annual rate.

I have entered a short iron condor spread on XLY, using options that trade for the last time 30 days hence, on September 20. The premium is a $0.91 credit and the stock at the time of entry was priced at $119.35.

The profit zone for this position is between $124.41 on the upside and $108.41 on the downside.

The implied volatility rank (IVR) stands at 36.9.

Premium: $0.91 Expire OTM
XLY-iron condor Strike Odds Delta
Long 127.00 97.0% 6
Break-even 124.41 89.0% 12.5
Short 123.50 81.0% 19
Short 114.00 81.0% 19
Break-even 108.91 87.5% 12.5
Long 108.00 94.0% 6

The premium is 19.2% of the width of the position’s wings.

The profit zone covers a 4.2% move to the upside and a 9.6% move to the downside of the entry price, for total coverage of 13.8%

The risk/reward ratio is 4.2:1, with maximum risk of $384 and maximum reward of $91 per contract.

By Tim Bovee, Portland, Oregon, August 21, 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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