Update 3/16/2022: I exited my the put vertical spread within an iron condor on HAL, two days before expiration, for a $4.75 debit per contract/share, a loss before fees of $396 per contract. Shares were trading at $34.62, up $7.18 from the entry level.
The Implied Volatility Rank at exit was 66.6%, up 33.9 points from the entry level.
The call vertical spread within the iron condor is out of the money and can be expected to expire on Friday with no debit, for a profit before fees of $96 per contract share.
Assuming no debit on the calls, I expect the full iron condor to end with a $4.75 debit per contract share, a loss before fees of $300 per contract. I shall update the analysis after March 18 close with actual numbers.
I exited because the position is close to expiring and I wanted to avoid assignment, which would put shares of HAL in my account.
Assuming no debit on the calls, for the full iron condor shares rose by 26.2% over 54 days for a 177% annual rate. The options position produced a 63.2% loss for a -564% annual rate.
I have entered a short iron condor spread on HAL, using options that trade for the last time 56 days hence, on March 18. The premium is a $1.75 credit per contract share and the stock at the time of entry was priced at $27.44.
The Implied Volatility Ratio stands at 32.7%
The premium is 35% of the width of the position’s short and long spreads. The profit zone covers a 12.1% move to the upside and a 26.2 move to the downside.
The risk/reward ratio is 1.9:1, with maximum risk of $325 and maximum reward of $175 per contract.
How I chose the trade. The trade was placed to coincide with HAL’s earnings announcement, before the opening bell on January 24, after the weekend. The expected move was exceptionally narrow, at $0.36 either way, based on options pricing. So I went wider than the implied price range, $27.12 to $27.84.
By Tim Bovee, Portland, Oregon, January 21, 2022
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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