XLY Analysis

The Consumer Discretionary Select Sector SPDR Fund (XLY)

Update 9/20/2019: XLY hit the point at which I manage, half of maximum potential profit, and I exited, doing better than expected by taking 51.7% of the max. The exit cost on the options was a $0.57 debit, a $0.61 profit, with shares trading for $121.03, up $1.11 from the entry price.

Shares rose for three days after entry and then traced a sideways pattern. The implied volatility rank at exit was 33.0%, down 14.2 from the IVR level at entry.

Shares rose by 0.9% over 16 days, or a +21% annual rate. The options position produced a 107.0% return for a +2114% annual rate.

I have entered a short iron condor spread on XLY, using options that trade for the last time 44 days hence, on October 18. The premium is a $1.18 credit and the stock at the time of entry was priced at $119.92.

The profit zone for this position is between $126.18 on the upside and $106.18 on the downside.

The implied volatility rank (IVR) stands at 44.2%.

Premium: $1.18 Expire OTM
XLY-iron condor Strike Odds Delta
Long 129.00 94.0% 6
Break-even 126.18 86.5% 14
Short 125.00 79.0% 22
Short 112.00 81.0% 18
Break-even 106.18 87.0% 12
Long 105.00 93.0% 6

The premium is 21.5% of the width of the position’s wings.

The profit zone covers a 5.2% move to the upside and a 12.9% move to the downside of the entry price, for total coverage of 18.2%

The risk/reward ratio is 3.7:1, with maximum risk of $432 and maximum reward of $118 per contract.

By Tim Bovee, Portland, Oregon, September 4, 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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