Live: Monday, December 9, 2019

11:50 a.m. New York time

I’ve entered the following share positions in my upgrades and revisions portfolio: CRCM at $12.42 per share, FANH at $26.17, PWR at $40.47, SPAR at 18.01 and TLYS at 12.51.

11:05 a.m. New York time

I took a look at GDXJ as a short iron condor trade, which with an implied volatility rank of 21.1% is below my standard of 25% or greater. But, if I squint my eyes to blur the numbers, could conceivably pass muster.

But it didn’t. The risk-reward ratio of 4.9% is higher than I like. So I shall pass on GDXJ.

FXE, with an IV Rank of 25.8%, does meet my standard. However, FXE tracks the Euro, the UK is voting on December 12 in an election that could have a huge impact on how Brexit plays going forward, and therefore could prompt significant movements in the EUR/USD exchange rate. Generally, I’m averse to leaping into news maelstroms, and I shall pass on FXE.

That’s it for options. A sparse month with two positions, XLY and TLT. I’ll check tomorrow to see if any other prospects meet my IVR  standard.

10:40 a.m. New York time

I’ve entered a short iron condor position on XLY; analysis posted.

10:20 a.m. New York time

I’ve entered a short iron condor position on TLT and posted an analysis.

10 a.m. New York time

I’m removing XLP as a prospective short iron condor play. The IVR calculation dropped significantly in early trading.

9:35 a.m. New York time

I’m a week late in setting up my short iron condor plays constructed from options expiring January 17. The problem was — and is — a lack of volatility. My rules call for an implied volatility rank of 25% or above. That metric gives my potential profits enough of a boost so as to protect against loss and make the effort worth my while.

Every month so far this year I’ve been able to count on at least half a dozen exchange-traded funds on my prospects list meeting that requirement.

Not this month. Even the old reliable, precious metals, has failed to meet my minimum. I delayed making trading decisions for a week in the hope that volatility would inch up a little at least, but to no avail.

So, I’m setting aside my disappointment and dealing with a real world, a necessity for any trader. I have three potential trades if I go strictly by my rules: XLP, TLT and XLY. If I fudge the rules and allow trades down to an IVR of 20%, then I can add USO, if I can build a trade that meets my other standards. And if I round up the decision from 19.5% to 20%, then I can add FXE.

I’ll be looking at all four today and trading those that allow me to build a reasonable position. Or perhaps none at all. As one of my mentors long ago once said, an old hand in the options game, “You’re an amateur, and that gives you an advantage over the professional traders. Unlike them, you don’t have to take a trade.” Wise words.

My screen for the revisions portfolio has no exits and five additions: CRCM, FANH, PWR, SPAR and TLYS. I’ll be making those trades today.

By Tim Bovee, Portland, Oregon, December 9, 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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