GDX Analysis

VanEck Vectors Gold Miners ETF  (GDX)

Update 10/16/2019I exited my short iron condor position on GDX for 51.1% of maximum potential profit. The exit debit was $0.22, which is $0.23 below the $0.45 credit received at entry, with shares trading at $26.50, down nine cents from the entry level.

GDX traded sideways in a $2 range during the lifespan of the position. Implied volatility was 50.0% at exit, down 22.9 points from the entry level.

Shares fell by 0.3% over 15 days, or a -8% annual rate. The options position produced a 104.6% return for a +2,544% annual rate.

I have entered a short iron condor spread on GDX, using options that trade for the last time 45 days hence, on November 15. The premium is a $0.45 credit and the stock at the time of entry was priced at $27.17.

The profit zone for this position is between $30.45 on the upside and $22.45 on the downside.

The implied volatility rank (IVR) stands at 72.9%.

Premium: $0.45 Expire OTM
GDX-iron condor Strike Odds Delta
Long 33.00 95.0% 6
Break-even 30.45 90.0% 12
Short 30.00 85.0% 18
Short 24.00 82.0% 16
Break-even 22.45 88.0% 10.5
Long 22.00 94.0% 5

The premium is 18.0% of the width of the position’s wings.

The profit zone covers a 12.1% move to the upside and a 21.0% move to the downside of the entry price, for total coverage of 33.1%

The risk/reward ratio is 4.6:1, with maximum risk of $205 and maximum reward of $45 per contract.

By Tim Bovee, Portland, Oregon, October 1, 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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