Update 1/21/2022: The remaining bull put spread on MU expires today. I had hoped it would expire without value, but on the last day it moved from $0.00 to $0.05 per contract share, and so I exited to avoid assignment.
For today’s bull put spread transaction, I received a $1.14 credit per contract share and paid a $5 debit to exit. The transaction produced a $109 return per contract over 32 days, or a 2,180.0% profit, for a 24,866% annual rate.
Combining the separate spreads that composed the iron condor, here’s the analysis.
I exited my short iron condor position on MU, in two transactions, on the day of trading before expiration, for a $3.65 debit per contract/share, a loss before fees of $266 per contract. Shares were trading at $83.29, up $1.69 from the entry level.
The Implied Volatility Rank at exit was 65.6%, down 27.5 points from the entry level.
Shares rose by 2.1% over 32 days for a 23.6% annual rate. The options position produced a 36.4% loss for a -416% annual rate.
Update 12/30/2021: MU goes ex-dividend tomorrow, putting my in-the-money short call at risk of exercise. I exited the calls — a bear call spread — and retained the puts — a bull put spread — in the expectation that that they will grow more profitable as expiration approaches. After exiting the puts I’ll combine the two spreads’ results to show the outcome for the original short iron condor. For the calls that I exited, I received a $1.18 credit per contract share, and paid a $3.60 debit when I exited. The transactions produced a $456 loss per contract, a loss of 63.3%. Shares at exit were trading at $137.53, up $55.93 from their entry price. The IV Rank at the close was 35.5%, down 58.6 points from the entry level.
I have entered a short iron condor spread on MU, using options that trade for the last time 32 days hence, on January 21. The premium is a $2.32 credit per contract share and the stock at the time of entry was priced at $81.60.
The Implied Volatility Ratio stands at 93.1%
The premium is 46.4% of the width of the position’s short/long spread. The profit zone covers a 9.5% move to the upside and a 12.8% move to the downside.
The risk/reward ratio is 1.2:1, with maximum risk of $268 and maximum reward of $232 per contract.
How I chose the trade. The trade was placed to coincide with MU’s earnings announcement, before the opening bell on the day after entry. The short strikes were set to coincided with the expected move of $5.84 either way, based on options pricing, which gives a price range of 75.29 to 86.97.
By Tim Bovee, Portland, Oregon, December 20, 2021
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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