FXI Trade

Lot 3

iShares China Large-Cap ETF (FXI)

I have entered a short bear call spread on FXI, using options that trade for the last time 44 days hence, on November 19. The premium is a $0.68 credit per contract share and the stock at the time of entry was priced at $37.59.

The Implied Volatility Ratio stands at 59.2%

Premium:$0.68Expire OTM
FXI-bear dall spreadStrikeOddsDelta
Calls
Long42.0091.0%11
Break-even39.6879.5%23.5
Short39.0068.0%36

The premium is 45.3% of the width of the positions short/long spread. The profit zone covers a 5.6% move to the upside.

The risk/reward ratio is 3.4:1, with maximum risk of $232 and maximum reward of $68 per contract.

How I chose the trade. FXI has moved below resistance, the low of October 4, in what I count as a 5th wave in the decline that began on September 7. I set the strike price just above the peak of the most recent upward move within the descent. My read of the chart is that FXI is in a downward movement that will take a few weeks to work through.

By Tim Bovee, Portland, Oregon, October 6, 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.

License
Creative Commons License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

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