Albertsons Cos Inc. (ACI)

Update 2/19/2022: The remaining calls in my short iron condor position on ACI, reduced to a bear call vertical spread after i exited the puts in January, expired valueless on February 19 and imposed no debits on the position. The credit I received upon entry was all profit, less fees.

I gave results for the puts below when I exited them on January 24. In this update I shall first analysis the calls exit, and then put both together and analyze the original iron condor.

I exited my short bear call vertical spread on ACI when they expired out of the money for no debit per contract/share, a profit before fees of $95 per contract. Shares closed the day before expiration at $29.01, down $2.23 from the entry level.

The Implied Volatility Rank at exit was 19.4%, down 16.1 points from the entry level.

Shares declined by 7.1% over 40 days for a -65% annual rate. The options position produced a 100% return for a +913% annual rate.

I next turn to the entire iron condor, combining both the puts, which I exited early, and the calls, which expired without value.

I exited my short iron condor position on ACI in a piecemeal fashion, the final exit coming at expiration, for a $2.25 debit per contract/share, a loss before fees of $9.00 per contract. hares closed the day before expiration at $29.01, down $2.23 from the entry level.

The Implied Volatility Rank at exit was 19.4%, down 16.1 points from the entry level.

Shares declined by 7.1% over 40 days for a -65% annual rate. The options position produced a 4% loss for a -37% annual rate.

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Update 1/24/2022: The short puts in my short iron condor position on ACI were out of the money the day before the company’s stock went ex-dividend, and rather than risk assignment, I exited the short and long puts 25 days before expiration, thereby splitting the iron condor into two vertical spreads.

Here I shall analyze the short bull put spread that I exited. The short bear call spread will, I hope, expire without value on February 18, and at that point I shall analyze both the bear call spread and the original iron condor.

I exited the short bull put spread for a $2.25 debit per contract/share, a loss before fees of $104 per contract. Shares were trading at $28.28, down $2.96 from the entry level.

The Implied Volatility Rank at exit was #, up/down # points from the entry level.

Shares declined by 9.5% over 14 days for a -247% annual rate. The options position produced a -46.2% loss for a 1,205% annual rate.

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I have entered a short iron condor earnings play on ACI, using options that trade for the last time 39 days hence, on February 18. The premium is a $2.16 credit per contract share and the stock at the time of entry was priced at $31.24.

The Implied Volatility Rank stands at 35.5%

Premium:	$2.16	Expire OTM
ACI-iron condor	Strike	Odds	Delta
Calls
Long	38.00	90.0%	14
Break-even	35.16	77.5%	28
Short	33.00	65.0%	42
Puts
Short	30.00	57.0%	36
Break-even	27.16	72.5%	22.5
Long	25.00	88.0%	9

The premium is 43.2% of the width of the positions short/long spreads. The profit zone covers a 12.5% move to the upside and a 15.0% move to the downside.

The risk/reward ratio is 1.3:1, with maximum risk of $284 and maximum reward of $216 per contract.

How I chose the trade. The trade was placed to coincide with ACI’s earnings announcement, before the opening bell on the day after entry. The short strikes were set to coincided with the expected move of $2.49 either way, based on options pricing, which gives a price range of $30.21 to $32.70.

By Tim Bovee, Portland, Oregon, January 10, 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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