IWM Analysis

iShares Russell 2000 ETF (IWM)

Update 10/15/2019My short iron condor position on IWM reached 50% of its maximum potential profit, and I exited for a $0.60 debit with shares trading at $150.08, up $0.94 from its price when the position was opened.

IWM fell on the day I entered the position, traded sideways for seven days and then rose again, to a level slightly below its entry-day peak. The implied volatility rank fell 15.4 points, from 26.9% to 11.5%.

Shares showed a net rise of 0.6% over 14 days, or a +16% 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 November 15. The premium is a $1.20 credit and the stock at the time of entry was priced at $149.14.

The profit zone for this position is between $161.20 on the upside and $129.20 on the downside.

The implied volatility rank (IVR) stands at 26.9%.

Premium: $1.20 Expire OTM
IWM-iron condor Strike Odds Delta
Long 164.00 95.0% 6
Break-even 161.20 91.0% 10
Short 160.00 87.0% 14
Short 138.00 83.0% 16
Break-even 129.20 88.5% 11
Long 128.00 94.0% 6

The premium is 17.1% of the width of the position’s wings.

The profit zone covers an 8.1% move to the upside and a 15.4% move to the downside of the entry price, for total coverage of 23.5%

The risk/reward ratio is 4.8:1, with maximum risk of $580 and maximum reward of $121 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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