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%.
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