APA Analysis

Apache Corp. (APA)

Update 12/12/2019I exited my short iron condor position on APA eight days prior to expiration for a $1.09 debit, a $0.20 profit, with shares trading for $21.96, down $2.05 from their entry level.

APA fell sharply on December 2 after a disappointing report on its operations in Suriname and then recovered  part of the decline. The exit was at 15.5% of maximum potential profit.

Shares fell by 8.5% over 35 days, or a -89% annual rate. The options position produced an 18.4% return for a +191% annual rate.

I have entered a short iron condor spread on APA, using options that trade for the last time 43 days hence, on December 20. The premium is a $1.29 credit and the stock at the time of entry was priced at $24.01.

The profit zone for this position is between $28.79 on the upside and $18.79 on the downside.

The implied volatility rank (IVR) stands at 72.0%.

Premium: $1.29 Expire OTM
APA-iron condor Strike Odds Delta
Long 30.00 90.0% 14
Break-even 28.79 84.5% 20
Short 27.50 79.0% 26
Short 22.50 61.0% 33
Break-even 18.79 76.5% 19.5
Long 17.50 92.0% 6

The premium is 34.4% of the width of the position’s wings.

The profit zone covers a 19.9% move to the upside and a 27.8% move to the downside of the entry price, for total coverage of 47.7%

The risk/reward ratio is 1.9:1, with maximum risk of $246 and maximum reward of $129 per contract.

By Tim Bovee, Portland, Oregon, November 7, 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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