XLY Analysis

The Consumer Discretionary Select Sector SPDR Fund (XLY)

Update 10/15/2019: My short iron condor position on XLY reached 50% of its maximum potential profit, and I exited for a $0.46 debit, with shares trading at $121.00, up $1.28 from their price when I opened the position.

XLY fell on the day I opened the position, traded sideways for seven days, and then rose to above the entry level. The implied volatility rank fell by 5.5 points, from 38.8% to 33.3%.

Shares rose by 1.1% over 14 days, or a +28% 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 XLY, using options that trade for the last time 45 days hence, on November 15. The premium is a $0.92 credit and the stock at the time of entry was priced at $119.72

The profit zone for this position is between $126.92 on the upside and $10392 on the downside.

The implied volatility rank (IVR) stands at 38.8%.

Premium: $0.92 Expire OTM
XLY-iron condor Strike Odds Delta
Long 129.00 95.0% 5
Break-even 126.92 90.0% 10.5
Short 126.00 85.0% 16
Short 111.00 82.0% 16
Break-even 103.92 88.0% 11
Long 103.00 94.0% 6

The premium is 16.7% of the width of the position’s wings.

The profit zone covers a 6.0% move to the upside and a 15.2% move to the downside of the entry price, for total coverage of 21.2%

The risk/reward ratio is 5:1, with maximum risk of $458 and maximum reward of $92 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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