iShares China Large-Cap ETF (FXI)

Update 8/17/2021: I exited my bear call spread position on FXI 31 days before expiration, for a $0.17 debit per contract/share, a profit before fees of $0.62 per contract. Shares were trading at $39.89, down $0.87 from the entry level. The Implied Volatility Rank at exit was 37.4%, down 12 points from the entry level.

My decision to exit was based on the profit exceeding 50% of its maximum potential.

Shares declined by 2.1% over 14 days for a -56% annual rate. The options position produced a 182.4% return for a 4,754% annual rate.

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I have entered a short bear call spread on FXI, using options that trade for the last time 45 days hence, on September 17. The premium is a $0.48 credit per contract share and the stock at the time of entry was priced at $40.76.

The implied volatility rank (IVR) stands at 49.4%.

Premium:	$0.48	Expire OTM
FXI-bear call spread	Strike	Odds	Delta
Calls
Long	47.00	97.0%	4
Break-even	42.52	87.0%	2
Short	43.00	77.0%	0.27

The premium is 24% of the width of the position’s wing.
The profit zone covers a 4.4% move to the upside.

The risk/reward ratio is 7.3:1, with maximum risk of $352 and maximum reward of $48 per contract.

In constructing the position, I relied on Elliott wave analysis, using wave labels that are relative to each other and that don’t refer to named degrees. The short strike is placed just above the end of wave 1 {-1}. The present wave is 3 {-1}, and any subsequent 4th wave correction at the same degree will likely remain below that strike level.

By Tim Bovee, Portland, Oregon, August 3, 2021

Disclaimer

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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Based on a work at www.timbovee.com.