XLK Analysis

Technology Select Sector SPDR Fund (XLK)

Update 2/19/2020: I exited my short iron condor position on XLK for a $2.01 debit per contract share, a loss of $2.44 per contract share. The underlying stock was trading for $102.90, up $3.00 from the entry price. 

XLK stayed on a nearly constant uptrend during my holding period, moving above the $96 short call strike price into unprofitability, where it stayed. The implied volatility rank was 28.8% at the close, down 2.8 points from the entry level.

The options position produced a 60.7% loss over 40 days for a 128% annual rate.

I have entered a short iron condor spread on XLK, using options that trade for the last time 44 days hence, on February 21. The premium is a $0.79 credit and the stock at the time of entry was priced at $92.66.

The profit zone for this position is between $96.79 on the upside and $85.79 on the downside.

The implied volatility rank (IVR) stands at 55.3.

Premium: $0.79 Expire OTM
XLK-iron condor Strike Odds Delta
Long 98.00 89.0% 12
Break-even 96.79 83.0% 18.5
Short 96.00 77.0% 25
Short 88.00 76.0% 22
Break-even 85.79 81.0% 17.5
Long 85.00 86.0% 13

The premium is 31.6% of the width of the position’s wings.

The profit zone covers a 4.4% move to the upside and an 8.1% move to the downside of the entry price, for total coverage of 12.5%

The risk/reward ratio is 2.2:1, with maximum risk of $171 and maximum reward of $79 per contract.

By Tim Bovee, Portland, Oregon, January 8, 2020


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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