XOP Analysis

SPDR S&P Oil & Gas Exploration & Production ETF (XOP)

Update 10/17/2019My short iron condor on XOP hit 50% of maximum potential profit, and I exited for a debit of $0.26 with shares trading for $20.96, down $0.60 from my entry point.

XOP fell for three trading days after entry and then moved sideways for the remainder of the positions lifespan, staying within the narrow range of $20.37 to $20.48. The implied volatility range was 25.5% at exit, down 16.9 points from its entry level.

Shares declined by 2.8% over 16 days, or an annual rate of -63%. The options position produced a 100.0% return for a +2,281% annual rate.

I have entered a short iron condor spread on XOP, using options that trade for the last time 45 days hence, on November 15. The premium is a $0.52 credit and the stock at the time of entry was priced at $21.56.

The profit zone for this position is between $24.52 on the upside and $17.52 on the downside.

The implied volatility rank (IVR) stands at 42.4%.

Premium: $0.52 Expire OTM
XOP-iron condor Strike Odds Delta
Long 27.00 94.0% 7
Break-even 24.52 89.0% 11
Short 24.00 84.0% 15
Short 19.00 84.0% 13
Break-even 17.52 88.0% 9.5
Long 17.00 92.0% 6

The premium is 20.8% of the width of the position’s wings.

The profit zone covers a 13.7% move to the upside and a 23.1% move to the downside of the entry price, for total coverage of 36.8%

The risk/reward ratio is 3.8:1, with maximum risk of $198 and maximum reward of $52 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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